Unpaid in Full

How musician royalties are being pocketed by SoundExchange

The IRS of digital performance royalties, SoundExchange, claims it can't find thousands of often-popular artists to pay them their money. The deadline to contact them passes on June 30 for unclaimed royalties at least three years old; SoundExchange could pocket up to an average of $360 from thousands of the lowest-paid musicians in the world. Furthermore, all of the nonprofit's collections and disbursements are private, so the public doesn't even know how much SoundExchange is pocketing.

Low staffing at the 28-person royalty collection agency and notoriously flaky artists who don't or won't sign up have hindered the process, which sounds simple enough: Satellite radio, digital TV, and Webcasters pay SoundExchange, then SoundExchange disburses the money by sending it to those who've properly filled out the forms.

Over the past seven years, SoundExchange has found and paid thousands of artists, but admitted it can't find about 25 percent of the people it has been looking for. Today, that number stands at more than 8,300 artists, including plenty of notable acts like Danzig and Kraftwerk.

Obviously, some of these "lost" people are deceased; in that case, SoundExchange is looking for their heirs. And please note that the list is very long — check yourself at SoundExchange.com. Latin bands are especially numerous — any readers with expertise in that area should go over the list carefully, because we're guessing SoundExchange's Spanish outreach program es muy malo. Bands who find themselves on the unpaid list need to go to SoundExchange's Web site for a step-by-step on how to collect.

SoundExchange has said that it has have actually found many of the 8,000-plus artists on the lost list, but that many of them have simply failed to send in their paperwork.

Indeed, Elise Nordling of SomaFM has horror stories of shattered bands owed $1,000 who hate each other so much they refuse to get in the same room with a notary to authorize disbursement. "Some say it's just not worth the $250 check," Nordling says.

Musician flakiness aside, one wonders how hard SoundExchange has truly sought some of these artists. There's no small potential for mischief here. When an agency gets to keep the money it is supposed to be doling out to people it is responsible for finding, it is easy to detect at least a possible conflict of interest. And if SoundExchange loses money every time it finds an artist it is supposed to pay, what is its incentive to actually do its job? Are we really supposed to trust an organization that claims it can't find Max Stalling (www.maxstalling.com), Vicente Fernandez (hint: Try Mexico), or freaking Fat Joe?

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