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WTF Does SoundExchange Do and Why Do I Need It?

July 13, 2020

A lot of artists don't know much about SoundExchange. Despite being around since 2003, the organization still seems a little mysterious to even seasoned music veterans.

So let's take a real quick look at what SoundExchange does and why you shouldn't overlook the company when optimizing your music career. 

What Exactly Does SoundExchange Do?

SoundExchange pays money to the "featured artist" and the master recording owner. If you're an indie artist not on a record label, both of those probably mean you. What money do they pay you? Great question.

SoundExchange pays you money from satellite radio like SiriusXM and webcasting — specifically non-interactive webcasting. WTF does that mean? Basically, digital and Internet radio (like free Pandora accounts). But there are a lot more digital radio stations than people realize.

Case in point? SoundExchange currently handles licenses (reads: collects money from) more than 3,100 digital radio stations. They paid more than $900 million to artists and rights holders in 2019. 

How Is SoundExchange Different From ASCAP, BMI, SESAC etc.?

They pay different rights owners. Again, if you are an indie musician or write and release music yourself, you probably own 100% of the available rights on a song/sound recording. PROs ultimate only collect money for half of that (on behalf of writers and publishers — the person/people who own the music and lyrics themselves, as opposed to the physical recording).

That's not to say SoundExchange covers all of the other half, obviously. SoundExchange doesn't handle payments for on-demand streaming platforms like Spotify and Apple Music. Those come from your distributor. 

But SoundExchange does collect and pay you money that your other PRO doesn't (and likely never will). Because of this, you need a SoundExchange account in addition to your other PRO. 

How Much Does SoundExchange Pay?

SoundExchange pays based on administering a statuatory license, which basically means it pays a fixed rate per performance (or play). However, what that comes down to depends on when the station started operating, what kind of station it is (noncommercial vs. commercial vs. satellite etc.), and what kind of play it is (non-subscription vs. subscription).

The current "2020 Monthly Liability" for stations is $.0018 per performance if it's not a subscription station and $.0024 if it is a subscription station. SiriusXM has its own specific agreement, currently paying 15.5% of gross revenues. Bars and retail establishments that stream music to their patrons also have their own rates (currently 12.75% of annual gross proceeds plus a $20,000 annual fee).

All that is to say — like pretty much all form of royalty payments, it's complicated and varies wildly. In general though, money from SoundExchange tends to be more supplemental than substantial (relative to your normal digital income).

How Do I Get My Money?

It used to be a lot more difficult to upload and track your catalog, but in the past year SoundExchange finally rolled out an easy self-serve platform. Now both rights owners and establishments looking to use music can handle their business on SoundExchange's website

The most important thing is that you create your account, log in to SoundExchange Direct, and start searching for and claiming your songs (typically by ISRC or title). There's no reason not to do it (it's even free). And given what the process used to be like, be happy you can now do it all in less than 30 minutes. 

Even if you're just getting started, getting signed up with SoundExchange is a must-do. You'll be sure to capture money you might otherwise leave on the table — and you can hold your head high knowing you've taken care of capturing one of the more elusive royalties out there.

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