When is a service not a service? When it collects money from subscribers, supposedly for one purpose, then uses it for another. That’s what’s reportedly happening with a popular platform for webcasters that collected money it said would go towards covering royalty and rights payments, but those payments were allegedly never made.
On Monday April 18, 2011, non profit Performance Rights Organization SoundExchange** posted a Public Notice Of Disabling Of Access To SWcast Services. SWcast‘s services included a hosted platform for independent webcasters, for a fee. The fee contractually included royalty payments from webcasters to SoundExchange, as required by law. SWcast was then expected to pay royalties on behalf of their users. A few hundred stations ran smoothly on SWcast, and SW cast took broadcasters’ money, supposedly putting it toward legal artist royalty obligations.
Great service, but that’s apparently not what SWcast actually did. From the SoundExchange Public Notice Of Disabling Of Access:
SWCast. . .does not provide the promised services. Specifically, and despite its claims, SWCast has failed to abide by its obligations under the statutory license, did not pay anything to SoundExchange for years, and, as of the date of this letter, has not even attempted to make any payment to SoundExchange for any period after 2005. SWCast has also never provided the reports of use that are clearly required by the statutory license
It seems SWcast Services received payments from their users over a six year period, but what happened to that money is unclear. Based on the Public Notice, SWcast never sent a single payment to SoundExchange.
In a stroke of morissette-esque irony, the first shutdown of a service provider in the ongoing Webcaster – SoundExchange saga is apolitical. Taking money from users for the mutually agreed purpose of paying royalties, and not following through with that obligation as expected by users (ever) is not a business. It reads like a scam.
Using an interesting defense strategy that apparently includes creating social media and quickly deleting it, Founder Randall Krause was suspected by some to be sock puppeting (that is, posting comments about oneself/one’s business under a anonymous screen name) on respected tech news site CNET.
A comment popped up on Greg Sandoval’s article “SoundExchange relies on DMCA to shutter Webcaster” – that defended SWcast. A response to the “anonymous” comment suggested the anonymous commenter was actually Krause, even as another response linked to very recent and hidden changes to the posted public agreement between SWcast and its users (broadcasters), hosted by SWcast.
The agreement originally included language obligating SWcast to make payments to SoundExchange on behalf of their users. According to the comment reply, the word “SoundExchange” was recently removed from the agreement.
All of this went down in a comment section, and I read it. But I wasn’t fast enough to screenshot it in time, and those comments have disappeared from CNET. I contacted the post’s author, Greg Sandoval, by email to see why they are no longer visible. He says he is looking into it, and as soon as there is more information, I’ll update.
Speaking of disappearing media, a YouTube video posted by SWcast’s founder claiming his company had done nothing wrong spread like wildfire and was critiqued by way of comments – shortly thereafter it was marked “private” on SWcast’s youtube channel.
SoundExchange isn’t the only PRO payment webcasters trusted SWcast to make – so what about ASCAP, BMI et al?
Meanwhile, the wheels keep flying off the SWcast bus, as they just tweeted a virus warning:
SWcast isn’t a victim, as their messaging would lead you to believe. While SWcast provided a platform for small webcasters, the company didn’t fulfill their obligation to customers, consumers or artists. It is unclear to me what services, if any, SWcast did provide to webcasters.
SomaFM’s Rusty Hodge flatly confirmed what I thought to be true. “SX [SoundExchange] didn’t take down any webcasters,” he wrote in an email to me.
“They took down a service provider that was allegedly providing a service that paid SX, but wasn’t paying SX.”
I take it back: it doesn’t just read like a scam, it reads like a big lose-lose.
**Disclaimer: I am a SoundExchange consultant regarding unrelated issues. This piece is independent of my professional work. I have taken great personal and professional interest in both the survival of webcasting and royalty payments since 2006. I co-organized a fundraiser to Save Net Radio, sponsored by Pandora, with other webcasters and local music tech startups. I’ve even been to Congress, explaining why what we call internet radio is both a groundbreaking and vital tool in music consumption. And frankly, from a marketing viewpoint, I have yet to define the difference between consumption and promotion. Working in an industry essentially based on six basic copyrights, the last decade has been a deep learning experience, and it is from those experiences from which I try to articulate ideas and opinions for the SF Appeal.