SoundExchange Becomes A Major Source Of Online Revenue

When non-profit SoundExchange first started in 2000 its royalty payouts were so small that they were only rounding errors on most copyright owner and artists income statements. Today that's all changed as the service recently announced that it sent out $1 billion in royalty payments last year alone.

This is quite an achievement since it took SoundExchange 10 years to reach the first billion in payouts but two years for the second. In fact, last year the royalties paid by the organization accounted for about 16% of the American music industry's total income.

So where does the money come from? SoundExchange collects money only from digital radio, with the bulk of it coming from SiriusXM and Pandora. As a result, the organization has now become one of the major PROs along with ASCAP, BMI, and SESAC.

After deducting about 4.6% to cover its operating expenses, the organization sends 50% to the copyright holder (usually the record label), 45% to the featured artist and performers, and 5% to a special fund for session musicians and backup singers.

What's significant here is that artists actually get paid for radio airplay, unlike terrestrial radio where only the publisher and songwriter get paid.

If you're an indie musician and you're getting airplay on digital radio, there may be some money waiting for you in escrow. Sign up at SoundExchange today.

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Apple Music’s Beats 1 Radio Pros And Cons

Now that Apple’s new streaming music service Apple Music has officially launched, perhaps the biggest question remaining is how much the Beats 1 global radio station will add to it. If you haven’t checked it out yet (and you probably haven’t since it just live yesterday), Beats 1 operates 24/7 from Los Angeles, New York and London and is said to eschew the commonly used radio consultant data used by just about every terrestrial radio station these days in favor of the tastes of the DJs playing the music.

So what does that mean exactly? If we look at the big picture for the success of the station there are a number of possible pros and cons.

Beats 1 Pros

• Both terrestrial and online playlists are so tightly controlled today that you basically hear the same songs anywhere you go. Beats 1 can break this logjam with some fresh new music that can make listening to radio an adventure again as it was before consultants ruled.

• Beats 1 is free and available to everyone. You don’t have to be an Apple Music “member” to access the station, which is great for both exposure and an introduction to potential new customers for the service.

• It differentiates Music from the rest of the streaming pack. At least at the moment, there is no other streaming service that offers a similar feature.

Beats 1 Cons

• The big one is actually more of question as it’s the great unknown - Do people really care about curated content and music discovery from a non-interactive stream? And, do they care enough about it to make a difference? Read more on Forbes.

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

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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The Court Decision That Could Alter Royalty Payments

Flo & Eddie/The Turtles

A US Federal Court has ruled that SiriusXM violated The Turtles pre-1972 copyright by playing their music without either licensing it or paying performance royalties. The is a big decision that may have far reaching consequences for both classic artists, record labels and digital music services.

Right now digital music services like Pandora and SiriusXM don't pay royalties on any song that existed before 1972 because they argue that the master copyright law didn't exist before then. Broadcasters now only pay royalties to publishers but digital services must also pay the copyright holder when a post-1972 song is played.

The payment to artists and labels is estimated to be at least $60 million before punitive damages. That said, the ruling was made in California and therefore only effects California, so this may prove to be only the first battle in a long war. Several other lawsuits by the major labels and Soundexchange against digital broadcasters are also pending.

While the result may be ominous for the affected digital services, it will have little direct effect on consumers. This may have an eventual effect on broadcast radio though, which has managed to skirt the issue of paying anyone but publishers thanks to strong lobbying on the part of the NAB. With the precedent now set, a new attempt to have radio pay artists when their songs are played might gain some traction in Congress.

The suit was brought by Flo & Eddie (Howard Kaylan and Mark Volman), the two main players of the 60s hit makers The Turtles.

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The Turtles Sue SiriusXM For $100 Mil

If you're like me and like to occasionally sample some of the songs of the 50s, 60s, and 70s on SiriusXM, you may soon find that option no longer available thanks to a $100 million class-action lawsuit brought about by the 60s band The Turtles.

The Turtles had a number of big hits back then that get regular airplay on the Sirius 60s On 6 channel like "Happy Together," "It Ain't Me Babe," and "She'd Rather Be With Me," but the band feels that SiriusXM has not paid adequate royalties on these and thousands of other songs that date before 1972.

On February 15, 1972 all recordings began being protected by paragraph 114 of the Copyright Act, which provides limitations on exclusive rights and spells out the way that artist's are compensated. Unfortunately the law is somewhat murky on what happens with songs before that point, and The Turtles (Flo & Eddie - Mark Volman and Howard Kaylan) feel that Sirius has overstepped their bounds in that regard.

While millions of dollars are a big part of the picture, what might be even bigger is that the suit also seeks an injunction to prohibit any pre-1972 songs to be played on SiriusXM until the suit is settled. That would be a shame, since it sure is fun to hear some of the old songs.

Just for the record, Mark Volman is now an associate professor and director of the entertainment industry studies program at Belmont University, where I have spoken at in the past.

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