New York Times talks to SiriusXM, SoundExchange chiefs following licensing uproar

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Issue Date: 
Nov 7 2011 - 12:00pm

From Issue:

Mel Karmazin, CEO of SiriusXMIn late October, artist unions and SoundExchange issued official statements protesting SiriusXM's attempts to directly license music from copyright holders, thus circumventing SoundExchange (RAIN coverage here). Reports of SiriusXM's direct licensing aims first surfaced in August (here).

“We think rights holders should benefit from a more competitive and open environment created by inviting individual labels to set their own value on their content rather than having to follow the industry collective,” SiriusXM CEO Mel Karmazin (pictured right) now tells the New York Times.

The NYT also spoke with SoundExchange president Michael J. Huppe, who said that "at the end of the day, what [SiriusXM is] trying to do is get content for less money." He said SoundExchange would continue to push in the opposite direction, asking for higher royalties from the satellite radio broadcaster. "We believe that content is already undervalued."

Comments the NYT: "Sirius’s move was only the latest example of a gradual shift in the financial infrastructure of music. Many companies, from major labels to providers of background music, have been trying to reduce costs and gain control by circumventing the large organizations that have historically processed licenses and royalties."

You can find the full New York Times article here.

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SiriusXM Royalty payments

The sad part about this discussion is that the music industry and Sound Exchange (and to a degree, the CRB) continue to view this in a traditional royalty sense, ignoring the real value the musicians and copyright holders get from the exposure they receive on these channels. If the music was simply being used to make money, they might have a point. But along the way, millions of people are exposed to music they might not normally hear. There is VALUE in that exposure. Anyone who has ever had their music played on the radio can tell you the value of that exposure, and what it means to them in terms of concert bookings and residual income. But for some reason, the music industry seems to ignore the realities that they are durectly responsible for holding back the potential of digital broadcasting, and as a result, all the artists, songwriters, and copyright holders who could have benefited from even great exposure. People can only buy music and become fans of artists if they're exposed to it. These companies have spent hundreds of millions of dollars to create a system that makes that exposure possible. The value of that exposure needs to be calculated and included. Because at some point, it will become obvious that SoundExchange is an unfair monopoly, and that issue may go to court. SiriusXM should have a right to pursue alternatives to a monopoly.

Sirius/XM royalty payments

Sirius/XM passes along the cost of the royalty payments to their subscribers, even having the chutzpah to make the amount per customer a line item on the customer's bill!

I am a customer, and I deduct the amount from my subscription, telling their customer-service people who always call me and tell me I owe them more money, that this is the company's cost of doing business, and I'm not paying it.

It's a hassle, but it's the principle of the thing, and so far I'm still connected.

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