Hello,
I'm broadcaster of the ElectricBlues Radio station at Live365. ElectricBlues Radio currently has a monthly TLH (total listening hours) of around 85,000 hours.
The general chatter among broadcasting communities is that the overwhelming majority of Independent artists are not receiving royalty payments from Sound Exchange. There are likely many reasons for this "community perception", which may not be entirely true. However, I suspect a large number of Independents artists have simply not yet registered with Sound Exchange.
This is a multi-purpose email. First, it's a note to the artists I feature that they should explore the service Sound Exchange performs if they have not already done so. Secondly, clarification on some issues I think would help artists better understand the situation.
Information on the Sound Exchange (SE) website details that SE receives monthly payments and data from Digital Audio Sources (such as Live365), and it's clear that SE collects royalties on behalf of EVERY artist for every song played, regardless of their signed or independent status. However, beyond the fact that artists must register with Sound Exchange to receive payment, it is not clearly explained exactly how often and under what conditions the payments are made.
Specifically, I'm requesting info on the following:
1.) How often are distributions made to the artists?
2.) Is there a minimum amount of entitlement that an artist must achieve before they receive payment? In other words, taking an extreme example, if SE's records indicate that a particular song was listened to 1000 times in one month, are the recording owner and artist entitled to royalty payments from those 1000 performances (however small that payment may be), or must some minimum monetary level be met before royalty payments are made?
3.) Will information about the number of plays for a particular recording owner/artist be made available to them upon request if they are registered with SE?
4.) It's explained that 50% of royalties collected go to the recording copyright holder, 45% to the featured artist(s), and 5% to the non-featured artists. Are ALL the royalties collected on behalf of particular copyright owner/artist by Sound Exchange paid out, or are operating expenses first deducted from the amount collected before payments are calculated. If operating expenses are deducted, then what percentage of royalties collected is lost to operating expenses?
5.) How long does a recording owner/artist have to register and collect payment for past royalties collected by SE? If an artist signs up now, are they entitled to all royalties collected by SE on their behalf since it's inception?
ElectricBlues Radio runs a monthly playlist, and each song in that playlist customarily racks up 3,000-4,000 performances in a month's time. Some artists may have 3 or more songs my playlist for a given month, so in those cases there would be approximately 10,000 documented performances for that particular artist. It seems that this would certainly result in some recordable amount of royalties due.
Just doing some quick math, and using the .07 cent per performance fee set by the Final Ruling of the Library of Congress effective on July 8th, 2002.... 3,500 plays times .07 cents equals $2.45 in royalty fees collected off my broadcast for each song played over a one month period. Multiply that by three songs from the same artist and you get $7.35. Multiply it by the approximately 250 songs in a typical playlist and that represents potentially a minimum of $612.50 in monthly royalties collected from my one broadcast alone. I know not all royalties are collected on a per performance basis (some fees are based on percent of revenue), but (unless my math is wrong) this still seems to demonstrate that ElectricBlues Radio alone generates enough in royalty fees to justify the expectation that artists I feature should receive payments, if they have registered. Artists who are featured on several stations would of course do better.
If Sound Exchange could respond to the questions above, and also comment on the reasonable accuracy of the logic used in the previous paragraph to arrive at a rough estimate of the amount of royalty payments an artist on my station might expect to collect if they registered, I feel this would be very beneficial to everyone concerned.
regards,
Herman Nieuwendaal
ElectricBluesRadio.com
PS - To the artists in the CC list. I've copied you guys on this email because you should obviously have an interest in this information. $3-$7 a month is barely a significant amount, maybe not worth the effort involved, but this is money that is being collected on your behalf for all songs played at Live365.com, so you should at least be aware of the situation. My math could be way off either way.... the actual amount you're entitled to could be significantly more or less. For those of you who's music is featured on more than one station your royalty entitlement would be greater. If I'm in the ball park with the figures above, and if you could get even a small amount of cash rolling in from this process, it might prove worthwhile to then increase your promotional efforts to DJ's of netcasting services which report to Sound Exchange (not all Internet Radio is yet on board in this regard) and attempt to get your net play increased.
Hopefully Sound Exchange will provide some helpful insight on the questions/thoughts I've posed above. I will forward along any response I receive from them.
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Subject: Sound Exchange Royalty Distribution Process
Date: Tue, 27 May 2003 12:53:56 -0400
From: ACorio@soundexchange.com
To: herm@electricblues.com
Dear Herman:
Thank you for your thoughtful communication. In response, we have set out your questions with our responses in bold. Additionally, as to your final comment to the artists you have copied, it is important for them to be registered. As you mention, your show is generating a small amount of royalties - maybe an amount that someone would ignore. However, cable radio and satellite radio services also have Blues specialty channels. We also expect there to be significant growth in this new revenue stream and these small amounts may double or triple in a matter of two or three years and be ten or twenty-fold by the end of the decade.
John Simson, our Executive Director is a former artists' manager and we have searched for some of the "indie" artists he used to represent and some of them had in the tens of thousands of performances from the cable radio services. Frankly, as any artist should know, all checks, no matter how small, when combined, help pay the rent, or perhaps for the strings or the car payment.
1.) How often are distributions made to the artists?
SoundExchange has completed three distributions since its inception. These royalty distributions have covered performances on the cable subscription music services only (DMX, Muzak and Music Choice). In the future we will be distributing webcasting and satellite radio performance royalties, once all legal issues have been settled. Our inaugural distribution was released in October of 2001 and our second distribution was a year later. Our most recent distribution is imminent. Given the relatively small amount of the total pool, SoundExchange currently distributes annually, to keep our administrative costs low. As the royalty pool grows, it is our goal to increase the to semi-annual or quarterly distributions.
2.) Is there a minimum amount of entitlement that an artist must achieve before they receive payment? In other words, taking an extreme example, if SE's records indicate that a particular song was listened to 1000 times in one month, are the recording owner and artist entitled to royalty payments from those 1000 performances (however small that payment may be), or must some minimum monetary level be met before royalty payments are made?
SoundExchange issues checks once a $10 minimum threshold is met. SoundExchange holds royalties until an artist or rights owners reaches threshold. Upon receipts of playlogs from all licensees within a reporting period, all performances are matched and weighted against payment received. Performances are allocated on a one-for-one basis, so every performance from a specific licensee has equal value. For example, if webcaster A pays a monthly fee of $500 and plays 50,000 songs,and each song is heard by the same number of listeners, then each song would earn one penny. If webcaster B pays a monthly fee of $1,000 and plays 50,000 songs, and each song is heard by the same number of listeners, then each of those songs would earn 2 pennies.
3.) Will information about the number of plays for a particular recording owner/artist be made available to them upon request if they are registered with SE?
All distribution of royalty payments are accompanied by a detailed royalty statement listing artist, title, album, label, distribution period and royalty amount for each performance played. SoundExchange can also supply custom reports for any member rights owner or artist registered with us.
4.) It's explained that 50% of royalties collected go to the recording copyright holder, 45% to the featured artist(s), and 5% to the non-featured artists. Are ALL the royalties collected on behalf of particular copyright owner/artist by Sound Exchange paid out, or are operating expenses first deducted from the amount collected before payments are calculated. If operating expenses are deducted, then what percentage of royalties collected is lost to operating expenses?
SoundExchange's service is paid for by an administrative fee deducted from all royalties collected - this fee covers the actual cost of collection and distribution. Currently, that fee is 20%. As the royalty pool grows, our admin fee will decline. ASCAP and BMI, similar organizations (but who are much more mature and collect far greater sums) currently deduct around 15% admin fees.
5.) How long does a recording owner/artist have to register and collect payment for past royalties collected by SE? If an artist signs up now, are they entitled to all royalties collected by SE on their behalf since it's inception?
Under rules set by the US Copyright Office, once an artist or rights owner reaches threshold, they have 3 years to register with SoundExchange. While it is the copyright owner and artist's responsibility to register to receive their payments, SoundExchange has made extensive efforts over the past three years to find artists and labels entitled to royalties. In the Blues area, for example, we have worked with Bruce Iglauer of Alligator Records and others, to ensure that the word gets out. We also work with AFIM, an organization of independent labels, NARAS (the Recording Academy), AFTRA and AFofM, among others, to spread the word. If after 3 years, the artist or label is not registered with SoundExchange, the royalty amount is put back into the pool for redistribution.
Please contact us directly should you have further questions.
Best regards,
Angela Corio
SoundExchange
1330 Connecticut Avenue, NW
Suite 330
Washington, DC 20036
202-828-0120