SoundExchange collects and distributes the digital public performance royalty, which means performers and labels get paid for digital plays of their music. In 1995, Congress passed Digital Performance Right in Sound Recordings Act, which granted a performance right for the digital transmission of sound recordings. Previously, US copyright law contained no provisions for performance right in sound recordings. SoundExchange is the designated non-profit organization that collects the license fees and distributes royalties to those whose recordings were played digitally. Payees include the performer, non-featured artists and the sound recording copyright owner (most often, a label).

SoundExchange collects and distributes the digital public performance royalty, which means performers and labels get paid for digital plays of their music.

In 1995, Congress passed Digital Performance Right in Sound Recordings Act, which granted a performance right for the digital transmission of sound recordings. Previously, US copyright law contained no provisions for performance right in sound recordings. SoundExchange is the designated non-profit organization that collects the license fees and distributes royalties to those whose recordings were played digitally. Payees include the performer, non-featured artists and the sound recording copyright owner (most often, a label).

Contents:

• How SoundExchange works
• Does SoundExchange cover downloads?
• How often are royalties disbursed to artists and copyright owners?
• How is SoundExchange different from other royalty collection agencies?
• Why is it important for bands and artists to sign up with SoundExchange?
• How can a band or artist find out if they’re owed money for digital plays of their music?
• Does SoundExchange charge anything for this service?o
• How is SoundExchange governed?
• Payment for foreign airplay
• Do you have to be a SoundExchange member to receive royalty payments?
• What Musicians Can Do

How SoundExchange works

SoundExchange collects and distributes royalties from statutory licenses, including:

• Digital cable and satellite television services (Music Choice and Muzak)
• Noninteractive “webcasters”. This includes webcasting stations that are just available on the internet — for example, soma.fm or Pandora — as well as the webcast transmissions of FCC-licensed radio stations — for example, the webcast of Seattle station KEXP.
• Satellite radio services (XM and SIRIUS)

These royalties are then distributed directly to the sound recording copyright owner (usually the record label) and the performer. The featured performer gets 45 percent, and the SRCO receives 50 percent. The non-featured performers receive the remaining 5 percent, which is distributed via a royalty pool managed by AFM and AFTRA.

Two important notes that are good for musicians: SoundExchange payments to record labels and artists are made simultaneously but separately. This means that artists’ royalties can’t be diverted by its label and charged against any existing debt. Also, SoundExchange royalties are administered on a per-performance or pay-per-play basis, rather than the “sampling” method employed by other organizations.

Does SoundExchange cover downloads?

No. SoundExchange only covers performance rights. Download royalties are covered by the reproduction right in a sound recording which means the royalties are based on sales and passed from the download stores to the record label, which then distributes sales royalties to the artist as per the label contract.

How often are royalties disbursed to artists and copyright owners?

SoundExchange does disbursements twice a year — once in summer and once in the winter.

How is SoundExchange different from other royalty collection agencies?

It works under the same model as ASCAP, BMI and SEASAC, but it represents a license on a different work. There are two copyrights contained in each recording — one for the musical composition and one for that particular sound recording of the composition. ASCAP, BMI and SESAC collect performance revenue for the owners of the copyrighted musical work (the song), i.e. music publishers, songwriters and composers. SoundExchange collects performance revenue for the sound recording copyright owner (usually the record label) and for the performers. They don’t compete against each other — in fact, their work is complimentary.

For example, when Patsy Cline’s version of the Willie Nelson song “Crazy” is heard on terrestrial radio, songwriter Willie Nelson receives a royalty from BMI, but Patsy gets nothing. However, when “Crazy” is played on satellite radio or webcast, Willie gets his royalty from BMI, but the estate of Patsy Cline also gets a payment from SoundExchange, as does the owner of that particular sound recording.

Why is it important for bands and artists to sign up with SoundExchange in addition to other performance rights organizations?

The internet has made it possible for independent artists to be heard by more listeners than ever before. This also means greater opportunities to be paid for their work, provided that they’re included in SoundExchange’s database of performers. It’s an even better proposition for artists that have retained ownership of their own copyrights. In those cases, individual musicians are paid as both the featured performer and the SRCO. Additionally, labels should make sure to sign up in order to receive royalties on the digital play of sound recordings they own.

How can a band or artist find out if they’re owed money for digital plays of their music?

The SoundExchange website features a performance-tracking system called PLAYS (Performance Log Archive of Your Songs), which allows artists and labels to search the SoundExchange database to see whether or not they have earned any performance royalties. Searchable criteria include artist name, song and album title, and record label. If you are the featured performer or sound copyright owner of a piece of music, then SoundExchange may be holding a digital performance royalty for you. To receive payment, all you have to do is register with SoundExchange and download a few forms.

Does SoundExchange charge anything for this service?

SoundExchange is free to join. Like other royalty collection agencies, there is a small administrative fee taken out of the overall royalty pot, but bands or labels do not see a charge on their statements.

How is SoundExchange governed?

SoundExchange is overseen by a Board of Directors, which approves distribution methodology and administrative expenses. The board is split equally between artists and labels, with representatives from major and independent labels, as well as A2IM, the RIAA, and artist representatives from such organizations as AFTRA, AFM, the Recording Academy, Recording Artists’ Coalition, the US Music Manager’s Forum and the Future of Music Coalition.

Payment for foreign airplay

SoundExchange has also started working with foreign PROs to collect performance right royalties for those US artists who receive airplay in other countries. (Currently, 75 other nations have a performance right for terrestrial broadcasts; the US does not. Please see FMC’s fact sheet on the public performance right for sound recordings for more info) SoundExchange offers this service to members who authorize SoundExchange to collect these foreign payments on their behalf.

Do you have to be a SoundExchange member to receive royalty payments?

No. SoundExchange will distribute digital performance royalties to any artist, band or SCRO that registers with payee information, i.e., a name, address and tax info. To date, SoundExchange has processed more than 200 million performances. Not all of the artists have been paid, however, due to the lack of appropriate info. The best way to ensure payment is to register. SoundExchange also offers membership to those who register. Membership is still free and comes with added benefits.

What musicians can do

Visit SoundExchange’s website to learn more about the organization. Check the PLAYS database on their site to see if you or your label has accrued any royalties. Download the forms and become a member to ensure payment of existing or future digital performance royalties.

SoundExchange

FMC primer on SoundExchange

FMC blog posts on SoundExchange

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