Roughly 23% of Sound Exchange’s total revenues in 2010 came from Pandora, based on publicly reported info and some quick math by Live365 Attorney Angus MacDonald.
According to SoundExchange‘s Annual Report for 2010, the collections agency for the RIAA collected statutory royalties from all statutory classes of services in the amount of $263,593,310. That number includes royalties from services other than webcasters, such as satellite, cable services and subscription services.
According to Pandora’s recent SEC filing (dated 5/26/11), Pandora’s revenues were $137,764,000 for its last fiscal year, which ended Jan. 31, 2011. MacDonald notes that his comparison uses Sound Exchange’s calendar year reporting and Pandora’s fiscal year reporting which is February 2010 through January 2011, so it’s not entirely accurate, but very close.
MacDonald uses a factor of 45% as the percentage of Pandora’s overall revenues that the service pays to SoundExchange because that was the percentage that the service paid in their fiscal 2010 year. However, MacDonald also notes that with the newest quarterly report, Pandora’s percentage of revenues owed to Sound Exchange has increased to 53%.
Says MacDonald, “Using the lower figure – i.e., 45% – means that Pandora paid $61,993,800 ($137,764,000 * 0.45) to SX in the 12 months that ended Jan. 31, 2011. That $62 million is 23.52% of SX’s total revenues ($263.6M) collected in CY2010.” He adds that this is 23.5% of Sound Exchange’s overall revenues, the percentage of revenues the agency sees from Internet radio alone would be much higher.
SoundExchange, the performance rights organization that collects royalties on the behalf of sound recording copyright owners, has exercised its right under the Digital Media Copyright Act to request that access to a webcasting platform be disabled. SWCast is a platform that has offered a streaming solution to smaller webcasters that may not have the funds to develop their own streaming platform. “DJ your own web radio station.” says the site, offering “clearance to legally broadcast your music” along with technical support, streaming audio software and other tools.
According to SoundExchange, SWCast has failed to make any payments for royalties incurred after 2005 and has not filed reports necessary for compliance, while collecting monthly fees from webcasters for those payments and reporting services.
Randall Krause, President and CEO of SWCast, in a letter posted on his website, does not deny the claims and says he is “committed to ensuring that we reconcile any and all compliancy concerns of SoundExchange going forward.”
Meanwhile the more than 100 webcasters that were streaming with SWCast are left looking for another streaming partner – not to mention the monies they were paying thinking they were covering their royalties. Jason Stoddard, Live365’s Director of Broadcasting Sales, says there’s always room for them in their network. “While the disabling of SWCast is an unfortunate event for many webcasters, our ongoing dedication to complying with all royalty regulations means they still have a place to go.”
By everything I have read, the stations that were streaming with SWCast had no idea they were not compliant. While it seems that they were eclectic stations with smallish audiences, the betrayal of the stations and their listeners is not small at all. By all that I can see, SWCast represented that they covered all the licensing obligations for its stations. And SoundExchange hasn’t received payments for any period since 2005? All I can say is, what took SoundExchange so long?