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 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 recordingsfor 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 for whom they have good payee information, i.e., a name and address. 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 sign up; membership is free.
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.
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Musicians Get the Hint About Health Insurance
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March 25, 2008 Event details | RSVP
Pop Rockers OK Go "Tour" Congress in Support of Net Neutrality
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March 13, 2008 Press release
Spoken testimony
Written testimony
Rock the Net
New York State Music Education Events Examine Crucial Issues Facing Artists Kick-off forum in Buffalo on April 2 to focus on music, media, technology and policy issues for songwriters, composers and performers from all genres. March 7, 2008 | Event details
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Ann Chaitovitz Appointed
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FMC's Jenny Toomey Appointed Program Officer for Ford Foundation
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Seattle "Rocked the Net" Rep. Jay Inslee advocated network neutrality;
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GWU Betts Theatre, Washington, DC June 11, 2007
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FMC Statement on FCC's "Rules of Engagement" On Payola March 5, 2007
FMC Files Reply Comments in FCC Media Ownership Proceeding January 16, 2007
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December 13, 2006 Press release Report details
FMC Organizes Musicians Bringing Musicians Home Benefit concert at New Orleans' Tipitina's on November 6th featuring Steve Earle, Mike Mills, Allison Moorer, Tom Morello, Boots Riley, Corin Tucker and special guests.
October 23, 2006 Read press release Read press coverage
Job
Losses Associated with Radio Consolidation Undermine Localism and Diversity FMC, Newspaper Guild and Consumers Union urge FCC to take employment effects
of their policies into account during upcoming review of media ownership rules August 9, 2006
FMC Releases Research on Employment and Wage Effects of Radio Consolidaton August 9, 2006
FMC on Preserving the Dynamism of the Internet Opinion Piece on ABC News June 29, 2006
FMC Statement on Senate Commerce Committee Vote in Support of LPFM June 28, 2006
FMC Statement on FCC Media Ownership Proceeding June 21, 2006
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Pearl Jam Donation To Help Musicians Help Themselves Proceeds From Washington, DC Appearance to be Donated to FMC Artist Research
Council May 25, 2006 Press Release
FMC signs on letter to preserve net neutrality May 17, 2006
FMC Announces Dates for Sixth Annual Future of Music Policy Summit
October 5-7, 2006 Media Advisory May 15, 2006
FMC Statement on Release of Feingold's Radio and Concert Disclosure
and Competition Act of 2005 November 18, 2005
FMC Sends Letter to Senate Commerce Committee in Support of a
Public Performance Right for Sound Recordings October 19, 2005
Top Names in Music, Law, Technology and Policy Return to Debate Critical
Issues at Fifth Annual Future of Music Policy Summit
September 6, 2005 Media Advisory | Policy
Summit home page
FMC Announces Health Insurance Navigation Tool
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FMC Press Release: Music Mashes with Policy at DC Policy Day April 8, 2005
FMC's Michael Bracy Testifies in front
of House Judiciary Committee on "Digital Music Interoperability" April 6, 2005
FMC files comments at US Copyright Office on "Orphan
Works"
Comments also ask Copyright
Office to consider status of out-of-print recordings March 25, 2005
FMC Sends Letter to Senate Stating Concerns about S 193, Broadcast Decency Enforcement
Act March
10, 2005
FMC and artist groups file joint reply comments at FCC on localism in broadcasting,
MB Docket 04-233
January
3, 2005 PDF of document
