How MERLIN’s “PANDOLA” Deal Could Give Labels Access to Your Share of SoundExchange Royalties

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!

About Dr. David C Lowery

Platinum selling singer songwriter for the bands Cracker and Camper Van Beethoven; platinum selling producer; founder of pitch-a-tent records; founder Sound of Music Studios; platinum selling music publisher; angel investor; digital skeptic; college lecturer and founder of the University of Georgia Terry College Artists' Rights Symposium.

2 thoughts on “How MERLIN’s “PANDOLA” Deal Could Give Labels Access to Your Share of SoundExchange Royalties

  1. This is along the lines of what I’ve been saying about the major publishers pulling out of PROs and going direct.

    The folks left in the weakened PROs will be smaller songwriters and indie publishers.

    One other thing that’s interesting: the “willing seller, willing buyer” standard in the statutory for the public performance of sound recordings provides that the rates reflect what patted would agree to in direct negotiation. On the label side, the evidence are direct deals for interactive (like Spotify), minus the value of subscribers. So that’s kind of messed up, as the services aren’t apples-apples to begin with. Pandora wants the Merlin deal to serve as an example of willing seller, willing buyer negotiation.

    It may be that a percentage of revenue calculation is better, but not the 801(b) standard that SiriusXM enjoys.

    Someday, Congress is gonna hafta redraw the lines.

  2. Corrected typos:

    October 30, 2014 at 10:04 am
    This is along the lines of what I’ve been saying about the major publishers pulling out of PROs and going direct.

    The folks left in the weakened PROs will be smaller songwriters and indie publishers.

    One other thing that’s interesting: the “willing seller, willing buyer” standard in the statutory for the public performance of sound recordings provides that the rates reflect what parties would agree to in direct negotiation. On the label side, the evidence is direct deals on interactive (like Spotify), minus the value of subscribers. So that’s kind of messed up, as the services aren’t apples-apples to begin with. Pandora wants the Merlin deal to serve as an example of willing seller, willing buyer negotiation.

    It may be that a percentage of revenue calculation is better, but not the 801(b) standard that SiriusXM enjoys.

    Someday, Congress is gonna hafta redraw the lines.

    Reply

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