SoundExchange Issued $252M in Royalties In 2010
SoundExchange had its biggest year to date in 2010 wherein it dispersed $252 million in digital royalties. This brings its overall distribution to more than $600 million.
Such royalty pay-out increases can be attributed to the success and growth of streaming services; increased awareness among artists and copyright holders of the need to register; and improved processing of previously unpayable balances through data clean-up.
In 2010, the average royalty payment for artists was up 80% from 2009 to $2,800 and for rights holders it was up 39% to over $14,000.
To President Michael Huppe, these revenues are "an industry success story."
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Yes the payouts might be higher, but there are two questions:
1. How much did they collect? I bet it was much higher than the $252M. How much money wasn’t paid because “they couldn’t find the artist”?
2. How much went to Independent Musicians (vs. the labels of big acts like Lady Gaga).
SoundExchange is an advertiser here, and this article sounds more like a press release/fluff piece.
Contrary to the second paragraph of the article, Artists do not NEED to register. Artists who control their own rights control the payouts and make sure they get paid, and they also have no limitations on what they can do with their music/lyrics.
Artists need to ask themselves, what do companies like SoundExchange do for me that I can’t do myself? How much of that 252M did I get? and are the limitations/restrictions imposed worth the service and payout I receive?
Those questions are certainly important. But you’ve got to look at the bright side here. That’s a lot of money! At a time like this in the industry (I hate when people say things like that), at least it’s something!
Phil, all good questions. Let me tackle the first two, and then dispel some misperceptions in the third.
1. Total collections from music services were $262M in 2010, up 28% from 2009. Distributions, at $252, were up 62% from 2010. So as you can see, efficiency is also improving tremendously. We still face challenges, yes, but not so much in finding the artist as getting them register to claim that cash.
2. Not only “big artists” get paid. About 42% of the checks we send out are for less than $500 – usually to the people for whom that amount makes a big difference. Another 36% are for $501-$5,000, and just 18% are for more than 5,000. We sent out 19,000 checks in one quarter in 2010 – the vast majority of them to small artists and independent labels. There will alway be ‘big earners’ in this industry – we can’t control who gets played or who makes the top 40 – but under SoundExchange, every artist and label gets the same rate per play – every spin, every time. For the first time, small artists and labels are getting a fair cut, as well.
3. You’re right to say that artists maintain total control of their rights, but SoundExchange registration doesn’t change that. You’re still free to do exactly what you want with your music, whenever you’d like. SoundExchange’s role is to cover the “default” plays under the government compulsory license. Any time you don’t make specific arrangements with a webcaster or service, they can use SoundExchange to pay you directly. We’re non-exclusive, so you can certainly tell a service not to pay us for you (be careful about waiving your rights) but for every webcaster you DON’T make special arrangements with, chances are, money is coming to SoundExchange. There ARE NO limits or restrictions placed on you, and registration and royalty collections are always free. So, what we mean by artists NEED to register is that, by not doing so, they leave money on the table, for no reason at all.
Also, telling artists about their unclaimed cash is our sole reason for advertising here or anywhere else. Hypebot is a go-to source for people from all over the industry, so we are where they are.
Laura – thanks for the additional info. Very cool. I work in communications for a media arts college that is well connected in the music industry: IPR. I don’t know how many IPR (Institute of Production and Recording) business instructors even know about this yet, but I’m glad for the post! Good stuff!
Hey Laura, I appreciate the response.
Airplay is essential to discovery, and charging for it seems stupid to me. I’m not lucky to have musical talent (so I stay on the biz end), but I am an author, so I understand IP. So, say someone wants to write a blog post, and post a snippet of my book in their post, I’m all for it. It helps me reach an audience. I don’t charge them. They are actually helping me out, so it’s a fair exchange.
Music is no different. Nobody will buy a song/record unless they have heard it. Airplay takes care of that. The industry has fed artists that they need to collect at every level, which doesn’t work these days.
So, according to your numbers, SE made $10Mil in 2010. Now, I argue that an artist, who negotiates his own rights, and lets radio stations (all flavors) spin their song for free, will ultimately make more than the couple hundred bucks a year you will give them. I’m just not convinced that Artists got their moneys worth. I’m having a real hard time seeing the value here.
I’ll give you an example:
There’s a band in Sweden that I work with. I met the lead singer a few years ago, and started playing their songs on my show. My agreement is that I play the song, which helps market you and aids in discovery – that’s the “payment”. Scratch my back, I scratch yours sorta thing. So, after a few months of playing their songs and doing a couple of interviews, I get an email from him saying that they have all of this attention because they were played/interviewed on a “U.S. Radio Show”.
They are now getting reviews from all over the world, a ton of interest, and investments to keep going. All from one little internet radio station out in the middle of nowhere.
So, how does a $200 check stack up to that? Everybody focuses on money, the almighty dollar, but these days you have to look at much more. There are many types of currency – reviews, exposure, sales – ALL are important.
If musicians want to succeed, and stand above the crowds, they need to build relationships with these small little radio shows that broadcast on the internet, and sometimes over terrestrial/sat radio. This will increase exposure, and when combined with a solid marketing plan, will result in sales. I think companies like SoundExchange go against that, and actually get in the way of building that relationship.
Artists need to think differently these days, and the process that worked 5 years ago, isn’t going to work today.
Laura, I do respect you coming on here and clearing up the numbers and giving me some more facts. I don’t mean to be harsh on ya, please don’t take it personally. You guys have done a great job over the years giving artists money when the landscape was different, but I just think your service is no longer relevant, much like record labels.
At any rate, whether you agree with me or not, I just encourage everyone to do your homework, and not engage with any entity just because “it’s the way it’s always been done”. If you sign up w/ SE, make sure it’s in YOUR best interest and that they add some sort of value to your business.
I know this post is long, and I’m sorry. I’ll shut up now. 🙂
Laura, could you please email me (philbowyer AT gmail DOT com), there’s something I want to run by ya for a book I’m writing. In a nutshell, I want to include your side of licensing and how SE can help musicians.
Thanks,
Phil
Valid points mate. We’re based in England. We have to pay the PRS for a licence to stream songs by PRS bands here: http://www.eyeseesound.tv when what we are actually doing is promoting, for free to the artists, what we deem to be great but relatively unknown bands.
What irks me about the arrangement is most the bands see the value and are happy to let us host their videos and mp3s for free but the PRS won’t, even though the bands are the client and the PRS the service provider… so ultimately they are strong-arming their clients into fundamentally counter-productive measures where others (not us) will say f*** it, not going to pay, not going to play.
And this happens because of the 10% cut the PRS gets, not because it is necessarily for the best for the band.
But what ultimately really gets my goat is that despite us paying a flat fee licence, no matter how many streams get played on our site and no matter how many of those streams are actually PRS bands, is that at ABSOLUTELY NO POINT have they ever asked us which of the bands they are representing we stream… therefore the money being generated by the bands we do stream and pay for is ABSOLUTELY NOT going to the bands. Bet GaGa gets hers though… oh, and the PRS make their bit.
At every turn organisations espouse how they’re doing it for the artists yet one opens ones eyes and you notice that they’re not really. Sure SOME artists will benefit from it in small ways, others (less I would imagine) benefit in large ways, but mostly the organisations themselves and the usual Suit suspects benefit the most, and that irks me.
Not completely on-topic here, but hey, it’s good to vent somewhere that readers will at least understand the book you’re coming from even if they aren’t on the same page.
I couldn’t agree more!
Y’know it would be easy for us in the music space to allow our cynicism to prevail in the SX argument. We’re a cynical bunch and I’m no exception. But, without SX we might have no pending ledgeslation that will create the royaltys radio stations will pay lables and aritsts in comming years, nor would we have resonalbe rates for streaming. SX’s lobying efforts (and RIAA’s) are the result of that.
But here’s the real thing worth focusing our criticism upon: it’s not if SX is the way to go if you want a piece of this pie, it’s what as an artist/label my real choice?
Unlike songwriters who have a choice between PROs ASCAP/BMI/SESAC, for labels and aritst’s there is but one choice for representation, SX. Which is kind of saying that they have democratic elections in China; it’s just that there is only one candidate to vote for.
Wthout compiition there can be no checks and balencnces between SX and it’s members. You can never walk away and go “across the street” because you can get a better deal, as you can with the PROs mentioned above.
$10 million a year to collect money that one is legally entitled to is great work, if you can get it. Especially with a satff of only about 40 people amd sharred offices to divid that $10M among. The 10% vig has become so standard in the collections business that no one questions it’s valifdity. ASCAP charges it’s members over $100 million a year based on this same logic. Now, if it only costs SX $10M to collect for about the same amount of sources (maybe even more sources) why can’t the other PROS do it for about the same amount?
These are the questions that will lead to a better understanding of the motivations and the rationalizations for companies “doing it for the artists.”
We need to start asking those questions.
Typed on a mobile iThing with a very tinny screen, please pardon typeos.
Again, SoundExchange doesn’t prevent any artist from allowing any webcaster, broadcast, etc, to play their music for free if they find it promotionally valuable or for any other reason they wish. We just cover the default, which under IP law says, “recordings have value, and when someone else uses them, they should compensate the creators.” Super basic.
Also, SoundExchange is a non-profit, governed by a board of 9 artist reps and 9 label reps – we’re run by the people we pay and represent, so if it wasn’t good for them, they would have us do it differently. They have every incentive to keep our costs as low as possible, and since they set our budget, they’re more than capable of doing so. And with all due respect (and I say this with the greatest love for the job I do and the artists and creators I get to serve) the idea that ANYONE at SoundExchange is in this for the money is absolutely laughable. Most of us are musicians ourselves, and we do this because we believe in it.
I agree that the business model is not the same as it was 5 or 10 years ago. In fact, SX didn’t exist 10 years ago. We exist now because of the shift in music consumption from purchase to access – that is, if you’re enjoying music in lots of new ways and places, but mostly through streaming, not sales, then compensation for artists and labels has to make the same transition.
Moses, some day we will have competition, no doubt. But for now, with us trying to convince artists the right is real, and help webcasters and other digital services figure out how to comply with the law, it’s tough enough to meet one set of standards. That’s why the Copyright Royalty Board has appointed us sole administrators for now (and keep in mind, we’re non-exclusive, so any artist or company can direct-license and choose not to use SoundExchange, as can any music service – we’re just the ‘easy button’). ASCAP had 25 years to condition the industry before BMI came along. And please remember, while it may seem like it would benefit artists and labels to have another choice in the short term, the actual incentive it creates is for both (or each) of the competing PROs to go after the ‘big fish’ and leave the little guys to fend for themselves. As far as SoundExchange is concerned, every play is equal, so we have just as much reason to properly account for the garage band as Lady Gaga.
Also, re: administrative rates, SoundExchange is the lowest in the industry. We have averaged 5-8% each year, compared to 12-18% for our friends at traditional PROs. We run incredibly lean, and unlike most others, publicly report our finances.