CONTENTS

SoundExchange
One of the most prominent organizations specializing in collecting
digital revenue royalties is the Washington, DC-based SoundExchange,
which is a non-profit performance rights organization. What does
SoundExchange actually do for you? As the organization’s Marie Farrar
Knowles explains, “SoundExchange represents the entire recorded
music industry, including recording artists and record companies large
and small. The licenses we administer enable digital music services to
focus on what they do best, while ensuring that recording artists and
record labels are compensated for their work.”
Okay, so what is the organization's collection process? In other
words, from whom does SoundExchange collect those royalties that are
due to you?
SoundExchange collects statutory royalties from satellite radio (such
as SiriusXM), Internet radio, cable TV music channels and other outlets
that stream music recordings. The organization came to prominence
when a special group of copyright judges, called the Copyright Royalty
Board, were appointed by the US Library of Congress to determine
rates and terms for the digital performance of sound recordings. They
basically named SoundExchange the sole company in the US to collect
and distribute digital performance royalties
on behalf of master right owners, such
as record companies and recording
artists.
SoundExchange also represents
all independent artists who control
their own masters. The current rates
will be in effect through Dec. 31,
2017.
“Today,” Knowles explains,
“there are 2,000-plus digital
radio services that leverage the
license we administer to access
any commercially available work.
While this list is too long to share
in this article, a few examples are
services like iHeart Radio, Spotify
Radio (mobile service), Pandora
and SiriusXM.”
How considerable are the
royalties? SoundExchange
announced on its news page
that in 2012 its total distribution
to artists was $462 million,
which was a historical moment
for the organization. These
royalties continue to increase
for everyone; I’ve seen
my own SoundExchange
royalties grow dramatically
over the years.
This royalty money,
however, will not come to you automatically. In order
to get the most accurate royalties, you need to provide
SoundExchange with what is known as a “metadata
sheet.” Though it is time consuming on your part, it is
extremely rewarding in the long run. Providing this key
information has become a standard in the digital world.
Either you or someone you hire will have to list all of your
releases, as well as a comprehensive breakdown of each
song’s writers, publishers, track description and album
title, etc. (It's a simple Excel document.)
How important is such an organization for recording
artists and record labels? Knowles states that the digital
royalties SoundExchange is responsible for and the
statutory license it administers is incredibly important to
recording artists and record labels. “Currently,” she points
out, “performers in the United States are only paid when
their sound recordings are performed via digital radio—they
do not enjoy a full performance right. In other words, they are
not compensated when their work is broadcast on AM/FM radio.”
By registering with SoundExchange the individuals who created the
sound recording are now able to collect digital royalties for their work.
SoundExchange does support legislation that would provide recording
artists and record labels with the right to be paid royalties when their
work is played via AM/FM radio. “We encourage all recording artists
and labels to learn more and join us in this effort,” she says.
I was so intrigued with their process because I had seen a significant
increase in my own royalties. According to Knowles, in 2003, when
SoundExchange became an independent non-profit organization, they
“Sound-
Exchange
has put more
than $1.5
billion into
music
creators’
pockets.”
—Marie Farrar
Knowles, Sound-
Exchange
were collecting royalty payments from approximately 400 digital radio
services. Today, they collect and distribute royalties to artists and labels
from more than 2,000 digital radio services, including satellite radio,
Internet radio and cable TV channels.
This means that in just a decade, according to Knowles, “Sound-
Exchange has put more than $1.5 billion into music creators’ pockets.
In fact, the organization’s third-quarter 2013 payments of $153.7 million
mark the highest quarterly payment to recording artists and record
labels to date. When compared to SoundExchange’s entire 2003
distribution of $3 million, it is clear that more and more music fans are
listening to their favorite artists through digital radio.”
It is important to note, as SoundExchange points out on its site,
“SoundExchange is the performance rights organization (PRO) for the
digital age. The royalties that SoundExchange collects and distributes
are for the featured artist and the sound recording copyright owner.
ASCAP, BMI and SESAC collect and distribute royalties for the
songwriter, composer and publisher. Both satellite radio providers and
webcasters pay SoundExchange when they stream music due to their
utilization of the statutory license.”
It is still necessary, then, to join one of the three PROs: ASCAP, BMI
or SESAC, to receive your publisher and writer royalties.
Live Television
Videotape
Supplemental
Markets Fund (LTVSMF)
Another great royalty source that I’ve seen grow
substantially in the 21st Century is LTVSMF. It collects
and distributes residuals to musicians who have worked
on live television/video productions.
Shari Hoffman, Fund Manager of the LTVSMF,
explains their exact role. “We’re a non-profit
organization that works in association with the
American Federation of Musicians (AFM) to
ensure the collection, processing and distribution
of residuals to qualifying musicians who have
performed music used on live television
programs, such as Saturday Night Live, The
Late Show with David Letterman, The Tonight
Show with Jay Leno, various award shows
(GRAMMYS, Academy Awards, CMA Awards,
etc.), live reality programs (American Idol,
America’s Got Talent, The Voice, etc.), and the
soap operas (which in the olden days were live
broadcasts).”
Hoffman says the basic contract provisions
that generate revenue to the Fund are the result of
a collective bargaining agreement negotiated between
the AFM and the major television networks and television
producers in the late 1980s and early 1990s.
The actual responsibility to distribute these monies
was transferred to the Film Musicians Secondary Markets
Fund (FMSMF) in the late 1990s with an official “sub-fund”
established to distribute monies collected for musicians
working on these programs circa 2002, with a full-blown
division formed in 2010 known today as the Live Television
Videotape Supplemental Markets Fund.
“The provision,” says Hoffman, “is that you had to have
worked on at least one original AFM scoring session for a
specific live television production. A live television/video
production must generate some income or revenue as
a result of exhibition in a supplemental market to trigger
an obligation on the part of the producer/production
company to contribute to the Fund.”
How Important Is This For The Musician?
Can a musician expect to be paid well beyond the
original airdate of a program? Hoffman asserts that
many musicians receive payments far in excess of their
original session payments for a program, provided that they have
worked under the AFM Television Videotape Agreement. “The
payments,” she says, “can often continue for many years beyond
the time when these programs were first produced, providing
compensation for musicians and their heirs (beneficiaries) long after
a musician has ceased being actively involved in recording and
performing. Those who work non-union primarily get compensated
only for their original session performance, and nothing else. Or, in
other words, they work for a buyout.”
For example, I get a check each year from the Live Television/
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