SoundExchange Reports Record Distributions, New Rates

SoundExchange reports its distributions to rights holders increased 55% in 2009 to $156 million. Total revenues rose 20% to 204.2 million.

SoundExchange is a non-profit performance rights organization that collects statutory royalties from satellite radio (such as SIRIUS XM), Internet radio (like Pandora), cable TV music channels and similar platforms for streaming sound recordings on behalf of featured and non-featured recording artists, master rights owners (usually record labels), and independent artists who record and own their masters. (Webcaster royalties for publishers and songwriters are collected by performing rights organizations ASCAP, BMI and SESAC.)

The collection of streaming digital royalties is growing rapidly. SoundExchange has said it expects 2010 payments to again jump, over 2009 almost 60%.

One issue for which the collection agency has received criticism has been its total of unpaid royalties. However, this issue seems to have improved in 2009. However, according to the report, as of Dec. 31, 2009 SoundExchange had a balance of $294 million it its unpaid account. To provide greater understanding of the problems this relatively new organization is facing, it provided detailed analysis of these unpaid funds. For example, $88 million was “pipeline” funds in transit and $111 million is “unpayable funds”—$23 million unclaimed by foreign societies, $23 million due to problematic data, $43 million in unclaimed royalties and $22 million of account issues.

Average 2009 payments to SoundExchange’s 5,335 artists and copyright holders increased 57% to artists from $986 to $1,550, and 35% to copyright holders from $7415 to $10,040.

New Rates Approved
The CopyrightRoyalty Board (CRB) recently ruled on new rates for 2011-2015 for non-interactive webcasting services. Currently, CRB commercial rates for 2010 are $0.0019 “per performance” (the rate that is charged per listener, per track)—royalties which are distributed by SoundExchange to the artists and rights owners who helped to create that recording. The new rates that were set for commercial webcasters who are not broadcasters begin at $.0019 per performance in 2011, with gradual increases to $.0023 by 2015. The Copyright Royalty Judges also adopted the “broadcaster” rates that were the subject of SoundExchange’s settlement with the NAB in 2009. Under that settlement, broadcasters’ per-performance rate starts at $.0017 in 2011 and rises to $.0025 by 2015.