SoundEx "undistributed funds" top $200 million, Digital Music News finds

SoundExchange is holding over $200 million in unpaid royalties, according to Digital Music News. “And, given the growth arcs,” Digital Music News writes, “the amount may be quite a lot more.” SoundExchange’s current pile of $200 million is up from $96.7 million it had at the end of 2006, “highlighting the problems this organization is facing locating performing artists.” That said, according to IRS returns, SoundExchange had nearly $260 million at the end of 2008, showing that “a huge ramp-up in artist outreach” is having some effect.
The problem, SoundExchange said, is in part caused by the booming popularity of online radio. “The whole industry is increasing year-over-year,” said SoundExchange executive Laura Williams. “We’re just a part of, or more accurately a reflection of, that explosion.”
Yet to Digital Music News, $200 million in unpaid royalty payments still “sounds like a monstrous number, and one that should be drawing some scrutiny. One attorney reviewing the situation noted that ‘any non-profit carrying more than $200 million on its books has a serious problem.’”
Digital Music News questioned why services like Pandora have to pay “such heavy royalties if the money ends up in a holding tank, with large amounts undistributed?” Pandora reportedly spent $30 million of their $50 million revenues in 2009 on royalties. Yet Pandora founder Tim Westergren sympathized with SoundExchange. “I think, and I say this as a musician myself, that musicians need to step up here,” he said. “I don’t think SoundExchange is trying to hold on to money. It’s just remarkably hard to get musicians to take the initiative.”


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