SoundExchange Takes Aim At Uneducated Writers And “Very, Very Low” Rates

image from During  a webinar last week, digital performing rights organization SoundExchange answered questions ranging from criticisms of undistributed funds to why some payment checks were so small. During the session, articles critical of SoundExchange were dubbed as "written by people who didn’t understand the numbers they were looking at" by the organization.


"We’re a nonprofit – we can’t keep the money or anything," said a spokesperson during the webcast. "Every collection society has a large bank balance, but SoundExchange is unique in that we publicly report that balance, and we don’t clear our books at the end of the year by redistributing what’s not claimed."

As for the small checks, unfair statutory are to blame, according to SoundExchange: "The rates paid by most services, particularly webcasters and internet radio, are very, very, low," siting rates for pureplay webcasters like Panodra and Slacker that are currently about half of those paid by commercial broadcasters like Clear Channel. "It definitely adds up, but we won’t see artists making a fortune on this revenue any time soon."

SoundExchange royalties come from more than 1,400 services. Grooveshark was singled out as currently paying no royalties to its members.


Regular Hypebot readers know that I've been impressed by SoundExchange's recent efforts to educate musicians and distribute royalties. But continuing to point fingers – whether at journalists or net radio broadcasters – does not serve SoundExchange, its members or the new music industry well. 

Lobbying for fair royalties is core to their mission, but fair does not automatically mean higher. For many ot the artists that SoundExchange serves, internet radio and many of those same journalists, offer exposure that commercial channels never have. What is truly "fair" in this emerging sector is still to be determined.

As an organization born in the digital age, SoundExchange has a unique opportunity to bring stakeholders together rather than to place blame.  – Bruce Houghton

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  1. This debate on royalties is like the copyright debate – it just goes on and on. Musicians need to stop whining about this stuff and do something about it. Take control of their BUSINESS and make it happen.
    If the industry is to survive, musicians really need to take a step back, look at the system, and make business decisions about how to move forward, and worry less about the manufactured problems that labels/RIAA and the news media spew.
    If you want to get paid for making music, then figure out a way to make that happen. Stop relying on other organizations to do it for you.

  2. Not at all up to your usual standards of accuracy, Bruce.
    The entire webinar was extremely positive, focused on new models to help artists to maximize their royalties and advance their careers. We do 6 of these webinars a year, and archive them on YouTube and our blog for all to access We’ve also made a commitment to answer, on our blog, every single question asked during a webinar. Both of the topics you mention were answers to questions (2 of 22 asked), which we answer whether they’re issues we’d prefer to talk about or not.
    The questions that were asked were:
    1. “I know my CD received a LOT of airplay, but I only collected $13. What’s up with that?” The answer is, the rates are low, and the $13 represents more than 13,000 plays, which was about what this artist estimated.
    2. “Sound Exchange has received some negative press in the last year due to the money collected that has not been distributed. Has this hampered your efforts?” Our explanation of the negative press was to point out that most was not well-researched, and that the well-researched pieces were largely neutral or positive. Thus, it didn’t materially impact us, since the people we need to reach got the real info, not the headline hype.
    We asked for all questions, no holds barred, and these were 2 of the many we got and answered. Neither of them were in any way the intended purpose nor the take-away message of the webinar.

  3. Every quote in this articlew came directly from your (SoundExchange’s) official transcript of the call.
    Takeaway message or not – how can that be called inaccurate?

  4. “SoundExchange royalties come from more than 1,400 services. Grooveshark was singled out as currently paying no royalties to its members.”
    Is that legal? Why/how is Grooveshark not paying any royalties?

  5. It’s a matter of context, that’s all. We’re certainly not implying poor reporting, and I apologize for the flippant remark, which was meant to be friendly. I was clarifying that we didn’t call a webinar to comment on press coverage or argue for higher rates – these were follow-ups in answer to particular questions asked by participants on the webinar. To an artist who received thousands of spins, the rates seem very low (a tenth of a penny). We can explain it in terms of experimental rates for growing business models, but many artists are shocked at how many spins they need to receive for it to amount to a meaningful amount of royalties (see where we’ve addressed this before).
    We were only ‘pointing fingers’ for perhaps 30 seconds in a response to a question from an hour-long webinar. We’re just eager to see that all the positive, encouraging news for artists and labels that we covered in the presentation also gets noticed. 🙂 We agree that we’ve got a unique position to take music into the future, and we take it very seriously.
    Thanks for all you do.

  6. So Phil, are you suggesting that each artist enter into an individual contractual agreement with 1,400 music services and collect those royalties directly?

  7. No, I’m saying let them have it for free so you get exposure. Enter into individual contracts with studios and others for bigger contracts – you know the ones that pay around $300 and up for one time use, not the fraction of pennies that you get from the Pandoras.
    Again, look at it differently- everyone NEEDS airplay to “make it”, but yet they also feel like they are also owed a payment. It’s almost like double dipping. You get money, and the exposure.
    Realistically, how much are most artists making anyway?? Focus your efforts on the stuff that matters.

  8. Not sure what “make it” means anymore, but point taken. Given the pittance that these services pay for music, it seems a stretch to call it double dipping. Organizations like SoundExchange, and for that matter, ASCAP, BMI, and SESAC, are necessary go-betweens, so it makes sense to work with and support them.
    Now in the case of SoundExchange, it’s obvious that they have a *long* way to go when it comes to transparency and modernizing their downright archaic system.

  9. When I say Make It, I just mean get an audience. It’s not a stretch on the double dip- the artist get’s paid twice, once in the royalty and again in the exposure. Remember, there is more than one type of currency, it’s not all about dollars and cents.
    Why exactly are ASSCAP, SE and the others necessary go betweens? Because “that’s the way it’s done”? That’s BS. I would argue that unless you have explicitly asked these orgs to claim royalties on your behalf, if they do so it’s illegal – stealing. You don’t have to copyright your songs – or you can allow someone to use your music for a certain purpose – which I don’t believe you can do under the ASCAP/BMI systems. Bottom line is, when you write a song, you own it. Once you let these other orgs in, you no longer own it. You need to play by a whole new set of rules.
    These companies may have been a necessary evil a few years ago, but these days it makes for very bad business to sign up with the ASCAPS and SE’s of the world (and labels too for that matter, but that’s another discussion).

  10. So “good business” is not registering with rights organizations? Don’t you want to be able to *measure* your exposure, as opposed to it being some nebulous thing? And if you’re concerned about ownership of your music, entities like SoundExchange and ASCAP/BMI serve to affirm that ownership through documentation (SE logs the Sound Recording Copyright Owner and performers, ASCAP/BMI the writers and publishers).
    They are necessary because the alternative is that artists would have to enter into direct contracts with every single music service on earth. Aggregating all of those transactions under one roof is just common sense, as is taking advantage of the services that these companies offer.

  11. Re-read what I said. IF you focus on ONLY the bigger licensing options like tv, film, etc, then you don’t need the rights orgs. This is what I am advocating, so yes, it is good business to manage (which is easy).
    Now, if you want to earn royalties on airplay, then yes you do need the rights orgs otherwise you’d go mad trying to work thru that.
    I just think the exposure is payment enough, therefore using the SE’s & others isn’t needed. It’s all in how you look at things, and how you want to run your biz.

  12. While I get what you are saying, I think that it’s a completely unrealistic business proposition, not to mention – shall we say, misinformed – on a number of other levels.
    First the bad business sense: the “bigger licensing options” you speak of are a limited and very competitive market. The limitation comes from the number of such options and from the budget constraints they have. There will also be a limit to the number of tracks licensed for any particular option and hence the competitiveness. Cracking the market for major productions can be very difficult for an unknown artist, while the smaller productions will usually have a shoestring budget and little funds for sync fees.
    Besides, collection societies don’t do synchronisation licensing in any case.
    Now for the additional silliness, in points:
    1. Music is the core value proposition for all music services (and music radio, while we’re at it). It makes absolutely no sense that the providers of music services should not have to pay for third-party products (music) without which they don’t have any value.
    2. Exposure as payment is an option, but the question becomes one of balancing the fairness of the transaction. Thus, getting something for free should oblige the service provider to guarantee an agreed upon level of exposure (the “price” of the track). Can you see yourself negotiating this with a music service? Thought not.
    Besides, people die of exposure. “Getting exposure” is the number one justification music-based businesses give for offering grossly unfair terms to musicians.
    3. Given the legal framework of compulsory licenses, not signing up to SoundExchange, ASCAP, BMI et al. is just plain stupid. The money will be collected in any case – you just won’t be getting your share.
    Let’s remind ourselves of why that is: collective licensing gives rightsusers the certainty of being in the clear – copyrightswise – at known rates, thus saving them the need to negotiate licensing for every single use of every single piece of music that they may choose to play. It’s a compromise between the interests of rightsholders and rightsusers.
    The “exposure as payment” paradigm (still used for US terrestial radio) fails when we realise that the music most valuable to rightsusers (the hits) no longer requires any exposure – the fact that the hits are hits is what makes them so valuable to rightsusers. Compulsorly licensing still undervalues the hits, but is much fairer than “giving exposure” – the net effect of which is near zero in these cases.
    4. Depending on the future evolution of listening habits, the value of “exposure” may become an insignificant component. For instance, if streaming replaces music purchases then you will have nothing to “expose” (save for live performance, which you might well not be in a position to exploit in most territories).
    Even radio could easily be seen as competition to recordings, as opposed to a promotional complement, see Liebowitz:
    In short: no.

  13. Sounds like your stuck in the old world. I never said the bigger licensing deals would be easy. Actually, when you are talking indie films, it becomes easier although the paycheck isn’t as high.
    As the industry moves forward towards streaming, your points become more valid, but I’m arguing for a change. The type of change that is occurring in the publishing world. Much like the music industry, the publishing world doesn’t get it, and is beginning to fail. Authors are stepping it up, and self publishing at reasonable rates (charging .99 – 2.99 for a book) and making very nice livings.
    Granted it’s not an apples-apples comparison, but the model can work for music.
    You can’t apply what I’m saying to the current/old model because you are right, it won’t work. As an artist, you need to look at if that system is working for you, and if not, make the change. Get out of the system, control your rights, and run it like a business. You aren’t creating art, you are creating a product. That’s how people perceive it (for the most part). Treat it like a product, make wise business decisions, and you will be able to make a living with music. Just blindly following along is only going to kill your career- you’ll end up making a few bucks a month because everybody is streaming your music instead of buying it.
    The game has changed. Whether you want it to or not, it has. You can join the labels and blame everything on piracy and be dead in a few years, or you can find a strategy that works for you, and make a living w/ music.

  14. Please read what I wrote again and try to understand it this time.
    I’ll break it down for you: there is no “new industry”, there is no “new model” – there is a business and it pays to know who’s paying and what they are paying for. When the game changes – as with the introduction of SoundExchange (granted, a while back – but it was a significant change), for example – we make allowance for it.
    I am an economist (as well as a musician) and believe me, I know how business works. I also know what the going rates are. You can spout BS about “reinventing the biz” till you’re blue in the face, but it won’t change the reality one bit.
    If, on the other hand, you wish to call me out on logic or facts – I’m always willing to learn something new.
    However, the “music business expertise” you are providing at this point does more harm than good to those you are advising.

  15. Because Grooveshark is essentially a pirate service. The only way to get them to pay is sue them – as EMI had done a couple of years back.

  16. Sound Exchange only applies to radio services that are non-interactive. Like Pandora. Grooveshark pays royalties directly to publishers because they are not allowed to pay the cheaper SoundExchange rates. Sound Exchange has been known to try to pressure people to pay them when they know they are not supposed to, but they have their own problems distributing money to the artists:

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