Wednesday, November 26, 2014

Sony's Direct Deal With SiriusXM Could Be Bad For Musicians

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Right now a lot of publishers are leaning towards doing direct deals with digital distributors rather than letting ASCAP or BMI (the performance rights organizations or PROs) take care of it as they traditionally have. The idea is that the data is easier than ever to collect since it's all digital, and the PROs can take a long time to pay and then take a piece of the revenue as well.

This might take a while to play out on the publishing side, but on the label side, Sony-owned distributor The Orchard is making a play to cut the middle man out of the picture by making a direct deal with SiriusXM. In what could be the first of many deals, this removes the collection agency Soundexchange from the revenue picture.

Remember that when it comes to digital airplay, there are actually 3 parties that get paid - the songwriter, the label, and the artist (the latter two don't get payed for traditional terrestrial broadcasts). Soundexchange is the designated PRO for collecting this revenue, but The Orchard will now bypass them.

On the surface this sounds great for artists in the it appears there will be 4.5% more money in their pockets (that's the fee that Soundexchange charges), but don't forget that this is a company owned by a record label and labels are especially good at finding ways to not pay the artist all the royalties they've earned. Also, this is just another way of recouping advances so the artists won't see any money at all in end.

Soundexchange has done a great job in collecting and distributing royalties in the past, and based on its track record to this point, seems to be much preferred to a label when it comes to paying artists. Only time will tell how this will work out. If you're not signed up with Soundexchange, you should do so now if your songs are being played online.

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