Sirius XM Radio set off a flurry of complaints from trade groups and labor unions late last month. It was trying to bypass the standard method of paying for digital streams — through a royalty clearinghouse called SoundExchange — and negotiate directly with record labels.
Sirius’s move was only the latest example of a gradual shift in the financial infrastructure of music. Many companies, from major labels to providers of background music, have been trying to reduce costs and gain control by circumventing the large organizations that have historically processed licenses and royalties.
Such direct deals are perfectly legal. But opponents of the move by Sirius say that it could result in less money and more complications for artists …
But some worry that the weakening of such centralized organizations could hurt artists. That concern is especially acute in the case of SoundExchange, which pays artists the digital performance right income directly, instead of routing that money through a record company or other third party, as is typical.
In coordinated statements last month, the American Federation of Television and Radio Artists, the American Federation of Musicians and the National Academy of Recording Arts and Sciences (the group behind the Grammy Awards) warned musicians that if their labels sign direct deals with Sirius, the payments they now receive directly from SoundExchange could instead be sent to the labels, and therefore be subject to deductions.
“Even a cursory read of American music business history will tell you that oftentimes these deals were fairly onerous, and the deck was stacked against the artists,” said Casey Rae-Hunter, deputy director of the Future of Music Coalition, an artists’ advocacy group.