Neeta Ragoowansi is the director of artist/label -relations at SoundExchange.
Photo: Courtesy Neeta Ragoowansi
Songwriters and music publishers receive royalties for performances of their music on network and cable television, on the radio (including Internet and satellite radio), and in performance venues. The payments for such performances are tracked by the three performing-rights organizations (PROs) ASCAP, BMI, and SESAC. But did you know that if you're a performer or a master-rights owner of a sound recording, you may be due some royalties, too? Because of legislation passed by Congress in the 1990s, performers and the owners of master recordings can collect royalties for the digital public performances (such as on satellite radio or the Web) of their material.
These performances aren't tracked by the big three songwriting PROs, however. They're handled by an entity called SoundExchange, a nonprofit PRO designated by the U.S. Copyright Office to collect and distribute performance royalties for digital cable, satellite, and Internet radio plays on behalf of recording artists and sound-recording copyright owners. To find out more about this relatively unknown organization, which could already have money for you in its coffers, I caught up with Neeta Ragoowansi (see Fig. 1), SoundExchange's director of artist/label relations.
How does SoundExchange differ from the other PROs?
We are completely different in that we collect for the performers on a sound recording and for the owners of the copyright, regardless of who wrote or owns the underlying song. We don't compete in any way with ASCAP, BMI, or SESAC. So a songwriter who is also a recording artist, or a record label that is also a publisher, can be a member of ASCAP, BMI, or SESAC as well as of SoundExchange.
Talk about the history of SoundExchange. How did it evolve, and what exactly is its role?
Prior to 1995, recording artists and sound-recording copyright owners whose sound recordings were played by anyone in the United States did not have a right to receive royalties for the public performance of their work. This was in stark contrast to what was going on in pretty much every other country in the developing world, which collected and distributed royalties for the public performance of those recordings. As a result, users of sound recordings in the United States (such as radio broadcasters, clubs and stadiums, Webcasters, and digital-cable music services) were free to play them at will — provided they paid the royalties due the songwriter and music publisher (typically through ASCAP, BMI, or SESAC). However, no royalties were payable [to the artists on the recording] for the public performance of the recording. For example, still to this day an AM or FM radio station pays a royalty to the songwriter of “That's Life” but pays nothing to Frank Sinatra, who recorded the song. The music industry has attempted to correct this unfairness in the past and to get the applicable provisions in the copyright law changed but has been unsuccessful.
Finally, however, a limited right was created in the Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998. This granted [sound-recording] copyright owners a public-performance right for digital audio transmissions of their commercially released sound recordings. As a result, copyright law now requires that when these recordings are transmitted over digital cable and satellite television systems, satellite radio, or by Internet Webcasters (including radio stations that simulcast on the Internet), those users must pay a performance royalty to recording artists and sound-recording copyright owners — in addition to the music-publishing royalties [still payable to ASCAP, BMI, or SESAC].
SoundExchange was created to collect and distribute these royalties. It's an independent, not-for-profit organization, with an 18-member board made up equally of the very recipients of these royalties: recording artists and record labels (both indie labels and majors). We currently represent over 3,500 independent labels, over 31,000 recording artists, and the four major-label groups.
What is the scope of SoundExchange's tracking?
SoundExchange itself does not actually track what is being played. Rather, pursuant to Copyright Office regulations, the digital services (the licensees) are required to report certain portions of their playlists to SoundExchange. SoundExchange then makes distributions based on the data received from those licensees. Basically, if you get reported as having been played and you register with SoundExchange (so that we know where to send your payment), you get paid.
Where does the pool of money come from?
SoundExchange collects royalties paid by noninteractive streaming, subscription, and nonsubscription services. To break it down for you, the digital services we're talking about here are basically of three varieties:
- The noninteractive streaming Internet radio services (or Webcasters) and both commercial and noncommercial radio stations that simulcast over the Internet (or simulcasters).
- The satellite radio service Sirius XM.
- Services that feed music via digital cable and satellite television (audio only), such as Muzak and MusicChoice. Sirius XM and MTV have also launched these types of services.
How is the distribution determined?
It's determined by copyright law and regulations. SoundExchange, after deducting its administrative costs, distributes the monies as follows:
Fifty percent goes to the owner of the sound-recording copyright (the master rights), which is typically the record label or the recording artist (if they have not signed those rights away to a record label). Forty-five percent goes to the “featured artist,” who is basically the main artist on the track or on the album cover. Or, where there's a group, it would be the core members of the group, for the most part.
Five percent gets sent to a fund out in Los Angeles called the Intellectual Property Rights Distribution Fund, which is overseen by the musicians' unions AFM and AFTRA, for distribution to session musicians and backup singers (the “nonfeatured artists”). One does not have to be a member of the musicians' unions to collect these monies, and any nonfeatured artists interested in finding out more on how to collect these monies should go to raroyalties.org.
How does an artist or a label register with SoundExchange?
In most cases, it's really quite simple. One can go to our Web site at soundexchange.com [see Fig. 2] and download, print, complete, and mail or fax the forms, and they're done.
What if there are multiple artists on a track? How do they get paid?
If the multiple artists are members of one band and they have one band bank account, then we can just send the payment to that one account and they can divide it up according to their own internal agreement. If the multiple artists you speak of are in fact multiple featured artists (for example, DJ Tiësto featuring Timbaland), then we will pay according to whatever agreement they have in place for how these types of performance royalties are to be split (once we are notified of such agreement). If there is no agreement, we will pay out to all featured artists listed in equal shares. So in the example above, it would be split fifty-fifty between DJ Tiësto and Timbaland.
How can artists find out if they're owed money already?
We have a search engine called Plays on our Web site. The first time you use it, you must register as a first-time user and get emailed a password. Once you're in, you can search by your artist name, track name, album name, record label, et cetera, and see what has come to us as reported from the various digital services.
Does SoundExchange pay the producers of a project?
In some circumstances, yes. If the record producer has an agreement with the featured artist to get some portion of the artist's share of digital-performance royalties, there is a standard Letter of Direction (LOD) on the SoundExchange Web site (it must be our LOD that is used) that the member artist can complete, sign, and send in, asking that SoundExchange pay a certain portion (pursuant to the agreement between the artist and producer) of the royalties that SoundExchange allocates for them directly to their record producer. We are making direct payments quarterly to hundreds of record producers already, pursuant to receiving such LODs from our featured-artist members.
Are revenues growing?
Yes. More and more people are turning to Internet radio and satellite radio to consume music, as opposed to purchasing physical copies or owning digital downloads. In 2001, we collected about $6 million. In 2007, we collected approximately $140 million.
Rich Tozzoli is a producer, engineer, and surround mixer who has worked with artists such as Al Di Meola and David Bowie. Tozzoli is also a guitarist and composer; his music can be heard on Fox NFL, the Discovery Channel, and Nickelodeon.