It’s Ugly, But at Least Performance Royalties Are Growing

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For all the problems at SoundExchange (huge unpaid balances, the departure of Sirius XM, etc.), at least they’re contributing to an industry growth story.

According to stats just published by Music & Copyright, performance royalties grew 9.1 percent in 2010, to $1.6 billion on a global basis.  That’s a gain of nearly $130 million in the period, and perhaps more importantly, an accelerated growth curve.

The problem is that this is a hardscrabble game of pennies: it looks decent on the aggregate, but means essentially zero to most artists (if they know it exists).  That includes payouts from places like Pandora, which are distributed broadly on an assigned penny rate to labels and artists.

And, in the US, it means nothing from traditional radio.  Yet other formats still make the US the largest performance royalty market, and the long-term value of a terrestrial-based performance royalty is debatable.

SoundExchange was cited as the largest contributor to the increased balance.  In 2010, SoundExchange was credited for distributing $249.2 million to labels and artists, up from $155.5 million in 2009.  “SoundExchange’s position as the global leader is unlikely to be challenged this year, since collections were up 94 percent in 1H11 compared with 1H10,” the report indicated.

But who knows what 2011 and 2012 will ultimately look like.  SoundExchange lost a marquee relationship with Sirius XM Radio this year, as the satellite company opted to monitor and pay labels directly (a transition process that is just getting started).  It looks like the technology now exists to eliminate the collections middleman, and the effect on SoundExchange’s 2011 payouts remains unclear.  Separately, Pandora flatly told Digital Music News that they have no intention of leaving SoundExchange at this time.

And, there may be hope on efforts to match and pay artists that haven’t registered or remain unidentified.  Just this morning, CD Baby reported that it has successfully identified and paid $1 million in found royalties to its members, the result of a collaboration with SoundExchange.