Do you trust your label to properly apply recoupable expenses against your SoundExchange royalties? Even at the best labels mistakes are consistently made.
Currently all SoundExchange royalties are spit between the performer and the labels regardless of whether the performer is “recouped” with his record label. These royalties go DIRECTLY to the performer. The record label can not touch these royalties. This is one of the reasons that these SoundExchage royalties are so important to Performers. Performers do not have to rely upon the sometimes “creative” accounting practiced by their record labels.
The thing about the MERLIN PANDOLA deal is this gives Pandora and the Labels a “back door” to cutting the artists out of the equation. That’s the point of direct deals. Pandora and the labels can bypass SoundExchange. Pandora’s ultimate goal is to weaken their opponent in the SoundExchange. Right? By passing SoundExchange this weakens their finances and hence our collective bargaining positions.
Although SoundExchange so far has been able to continue paying the artist share of royalties on a nonrecoupment basis like a statutory license, There’s nothing stopping Pandora from changing their minds and fighting SoundExchange later. They can just start paying labels directly and their is really nothing that SoundExchange can do. Look what Pandora did with Pre-1972 recordings?
We know that many labels are struggling with the bad deals they cut with Spotify would love to get their hands on the artists share of digital broadcast royalties. The MERLIN deal gives them the perfect excuse.
Not only is MERLIN’s PANDOLA deal possibly illegal Payola, the decision to do a direct deal with Pandora was incredibly shortsighted. It will ultimately hurt indie labels by weakening their only ally in the government rate setting proceedings. It potentially weakens SoundExchange by depriving them of revenue. Thanks Merlin! Thanks Caldas!