I’m an Artist Manager. And SoundExchange Definitely Isn’t Screwing Me

This may be the strongest case yet for skipping that direct deal with Sirius XM.

It comes from an artist manager, who offered this comment following Sirius’ aggressive lawsuit against SoundExchange and A2IM.

“Paul,

Your own articles answer where we should all land on this issue.

How many articles (and comments to articles) have been posted on DMN asking, “What is Spotify, Rdio, Rhapsody, Grooveshark, etc. paying artists?”  NOT ONE of the articles can be accurately answered because the answer truly is that everyone is paid differently based upon direct licenses with master owners (typically large labels) that are subject to non-disclosure agreements (hiding the fact that superstar artists on major labels are given preferential treatment in terms of per stream royalties).

Now compare that to the publicly-announced statutory royalty rate that is mandated by the Congressionally appointed Copyright Royalty Board (and administered via SoundExchange).

Every play of every record is monetized at the same royalty rate.  Equitable treatment!  Every dollar paid is split 50/50 between the master owner and the performing artists and the artist share is paid directly to the artists, not to the labels and then tied up in ‘unrecouped accounts’.  How novel!

Are there problems at SoundExchange?  Absolutely.  These problems have been well documented here on DMN.  There are artists who say they aren’t getting paid or can’t get straight answers from SoundExchange.  That needs to be fixed, for sure.  I can’t speak to those charges because I, for one, have a pretty good relationship with Shane German at SoundExchange and I get good answers from him when I have questions on behalf of my clients.  My clients get regular checks every quarter from SoundExchange.

I can’t say that about any of the services I mentioned above nor can I say that about the labels I’ve signed artists to.

I’ve never had to negotiate or haggle about what percent my clients should get from SoundExchange (try haggling with a label over Spotify rates – ugh!).  I just register them and then occasionally check in on their metadata to make sure that errors aren’t occurring.  I have new artist clients who don’t make anything or don’t make much and they get frustrated but the rates are so small (per play) that it takes a while before they get enough play to get paid.  I’ve seen it first hand.

If labels sign these direct licenses with Sirius guess what happens: 100% of the royalties get paid to the labels and artists only get paid if they’re recouped.  Labels and artists lock in at lower rates than what Sirius is currently paying (and this year there will be a new rate setting announced by the Royalty Board and it’s very likely that they’ll increase Sirius’ rates).  And small indies will get a lower royalty rate (per stream) than bigger indies and majors will get even higher rates and they’ll all be under the cover of non-disclosures so no one will ever know what they should be paid unless they pony up to audit their label.  That doesn’t seem to be a system worthy of defending.  I say congrats to SoundExchange, A2IM, Merlin, etc. for defending this statutory rate.  I think that’s what these organizations were constructed to do, no?

As for the Mafia-like tendencies alleged?  That’s pretty funny coming from Sirius since the license they’ve offered to indies includes a threat that anyone who doesn’t sign up may not get played on Sirius in the future.”

26 Responses

  1. Amen

    Agreed.

    DMN retweeted somebody who said they got $1.09 for 250,000 plays on Pandora. Whoever said this is either full of shit, making it up, a liar, or is being ripped off by his manager or label.

    • Actually

      I’m looking at my girlfriend’s BMI statement right now. She has 33.33% of the writing on a particular song that was played 32,300 times on Pandora in the US.

      The royalty amt: $.41

      Explain to me what that has to do with a manager, or label. These are writing shares and performance rights.

      What I’m NOT seeing anywhere is how much the PRO is taking from these.

      • plaw

        The roles that BMI and Soundexchange play under the U.S. copyright laws are very different. Soundexchange only collects royalties for the “performance” of the actual recording on Pandora and similar internet “radio” websites. This would not include what is collected by BMI or a similar PRO for the composition of the song.

      • The Math

        Pandora would have paid S/E $35.53 for those 32,200 plays. ($0.0011 per play) Pandora pays about $15 million per month in royalties to S/E.

      • BMI vs Soundexchange

        Hey dumbfuck with the girlfriend, shut up until you know the difference between BMI and Soundexchange. You sound like a fucking idiot.

  2. Anon

    I don’t get it. What is that picture supposed to be?

      • paul

        It was supposed to be an artistic take on an envelope, the ones that have checks inside.

        Oh well, #non-epicfail

        easily replaced

        /paul

  3. tippysdemise

    very happy to see this brilliant post by a fellow manager is getting more view.

  4. Mark

    Unpon a recent visit to the Sirius studios, two employees told my client [off the record] not to sign the agreement with Sirius. They told she had a better chance of getting paid by Soundexchange.

  5. Just Another Voice

    I am good friends with members of several bands that tour nationally, have charted nationally (on various recognized charts), and have received royalties via SoundExchange.

    In one particular case that I am personally and intimately aware of, the band earned enough via SoundExchange to fully self-fund their next album, which has alread reaped sufficient SE royalties to fund the next album — and we’re not talking CHEAP here … we’re talking national quality albums.

  6. @Planet T Music

    Musicians! Keep Focused.

    It’s dog eat dog.

  7. @wampusmm

    This is exactly why indie artists need SoundExchange — to protect the statutory royalty rate.

  8. nathanJE

    “As for the Mafia-like tendencies alleged? That’s pretty funny coming from Sirius since the license they’ve offered to indies includes a threat that anyone who doesn’t sign up may not get played on Sirius in the future.”

    And? What’s wrong with that? Do we live in Sweden here?

    Sirius Radio is not some public service and definitely not National Public Radio. It required a lot of money to build — their money and investors money and they are still in a lot of debt to get this off the ground. So they can work and play with whoever they want, and if you want to adhere to some other licensing that makes it harder for them then they shouldn’t play you — and they should say that out loud.

    • Food For Thought

      @NathanJE – you’ve heard “either your signature or your brains will be on this contract” haven’t you? The figurative comparable here is Sirius saying “your sign or we’ll boycott your music”.

      In a free market Sirius absolutely has every right to play what they want, but it is pretty ironic that a party delivering that type of pressure tactic threat upon labels (indie labels only, btw) to sign a direct license offering below already discounted statutory royalties alleging “mafia-like” behavior by two not for profit organizations for simply educating indies about what the current rate is, that a new (likely much higher) rate is to take effect in 2013, and that signing that direct license will prevent artists from receiving direct payment is pretty rich.

      Sirius should be allowed to make their threats and SoundExchange and A2IM should be able to give basic advice to indies seeking information to help make the best decisions for their businesses.

      Sirius got rejected by almost every indie label despite their threats and didn’t like it so they sued. Can’t tell if that is more mafia-like or spoiled brat-like.

  9. B. Helmet

    I just received (1 hour ago) my first long awaited Soundexchange check. They had told me when I signed up 6 months ago, that I was owed 450 bucks or so. The check that JUST came was for $2,250.00 big bucks! So to say that I’m happy with Soundexchange is an understatement! I love when decent money like this falls right into my lap!

    p.s. I’m part of an indie band, pretty well known for many years. Been with many labels, gotten lotsa airplay, etc….

    • Big Swizzle

      That’s great, how many plays have you gotten since you signed up? I’m sure everyone would love to know.

      • B. Helmet

        I’m trying to figure that out, but I can’t open the attachments. SE is trying to help me.

  10. Shawn

    What I don’t understand first off is why any artist in their right mind would use any streaming site. I mean come on .42 for 60,000 plays really?

    Pretty soon we are just going to be getting paid absolutely nothing for original music. Sound Exchange is a great service I wholeheartedly agree and it needs to be expanded upon and I’m sure it will with the ever changing ways that the Internet offers digital content to listeners. But there are way to many different services out there that offer artists next to nothing for their music. What happened to having a website and pushing your fans to it and making a great percentage on your music and merchandise sales? Original music needs less places to be on the net and more exclusively available through select avenues that are more artist friendly when it comes to getting paid for the creative process. Dont settle for .42 for 60,000 plays. Stick to the tried and true…your own website, Amazon, iTunes and your live show sales and if the fans want a sample of your music before they buy it….iTunes does just fine for that….anything else and your giving away your music for next to nothing….enough of my rant for the night….

    • Artist Manager

      @Shawn, it appears you’re confusing “streaming services” that artists can/are choosing to use vs. broadcast “streaming services” that do not need your permission to play your music. The broadcast “streaming services” that pay royalties to artists & labels through SoundExchange are limited to only those who qualify for the compulsory license (and available statutory rate).

      These broadcast “services” would more accurately be referred to as “internet, cable and satellite radio”. Radio stations, under compulsory laws, are entitled to play any music they want without getting a license (permission) from the artist/label. “Internet radio” can use that compulsory right but must pay performance royalties to artists/labels via SoundExchange. So, practically, there is no way for an artist to choose not to have his/her music played on these broadcast “streaming services”.

      Qualifying “streaming services” for the compulsory license must not allow on-demand streaming (meaning the listener cannot select a song and hear that song immediately) and must comply with certain “performance compliment” rules (i.e. the service cannot play the same song from one artist within a certain number of hours, must not play more than a certain amount of songs from a single artist within a certain amount of hours, etc.). Qualifying services include SiriusXM, Pandora, iHeartRadio, MusicChoice, for instance.

      Services like YouTube, Rdio, Spotify and Rhapsody are ON-DEMAND services that must secure a license with a negotiated royalty rate paid to artists/labels. An artist/label can choose not to have their music monetized on those services but not on the broadcaster equivalents above. Hope that clears this up for you.

      *note-Spotify & Rhapsody have “radio” offerings in addition to their on-demand functions and for those radio plays of songs only they DO qualify for the compulsory license and do pay SoundExchange

      **2nd note-YouTube is an on-demand service but has effectively used the unintended loophole in the language of the DMCA to not have to secure licenses to play your music because they can claim it is “user generated” which gives them a figurative gun they can hold to artists/labels heads to negotiate terms that are unfavorable to the artists/labels in a tactic that sounds sort of like this, “sign the license we offer and make a paltry split of ad rev or don’t…your choice but know that regardless your music will be played on our service”.

  11. B. Helmet

    You know, I’m totally loving what the internet has done for my career. I consider myself semi-retired. The music I’m getting paid on is mostly from 20 to 30 years ago. I signed everything up thru Cdbaby, and I usually get checks weekly from them. I love them! My band sells a few of our old cd’s thru Cdbaby, but we’re making our money from streaming and downloads. Primarily itunes of course. We just love getting these checks weekly. I also love how our fans can get hold of us. We’re totally accessible, we email them right back and they like that. Back in the 90’s we weren’t too active as a band, and I felt like we had no audience because they couldn’t get ahold of us and we couldn’t talk to them either. Now they can, what with all the websites we use now. I love being an older, semi-retired person who gets these cool checks for doing “nothing”!

  12. Ron

    Actually, you would all do better by not recording at all. Just play live gigs and demand more money for them. You could sell an album for $20 on the gig with strict language stating that it cannot be uploaded to any internet entity. The minute you upload , you loose control of your music. All these penny and even dollar payouts are a waste of time. Stream your music from your web site to gain fans. Put up a short 2 min Video on Youtube of the band performing. Sell phone ringtone tracks. Screw I-tunes! Apple is ripping off all musicians.Live gigs are all that’s left of the music business. Focus on getting paid for your craft!

    • B. Helmet

      How is itunes ripping artists off? I got most of my important songs on itunes directly, no middle man. I get the full 70 cents per download. I’m getting decent money every month. How are they screwing artists?

  13. David Kaspersin

    We have been trying to collect from Sound Exchange for a year and a half now. The do not return phone calls and very few emails. Its all over the internet that they do not pay.
    We are filing a complaint with the attorney Generals office.

    David Kaspersin
    President
    Dynamic Recording Studio Independent Label / Dynamic Web Pages
    2844-46 Dewey Ave.
    Rochester N. Y. 14616 -4630 USA
    http://www.dynrec.com
    drk@dynrec.com
    585-621-6270

    • B. Helmet

      Interesting story. It took me 6 months and a few dozen emails till Soundexchange finally paid us a few days ago. I wasn’t happy with them either, even though I knew they were legit. But again, it took me a bit of time to “harass” them into paying me, after telling me they had my money for 6 months, and it was in the pipeline..

  14. Visitor

    Have you looked at the Soundexchange agreement? If it’s like other PROs, they don’t just cut checks willy nilly when you ping them. They do payouts on a periodic basis, there can be lags. It can take months and months. That’s just how it works. My last check from ASCAP was for exploitations that happened a year ago.

    But once you get in the flow with them, if your music is being played enough to get up over the payment minimum thresholds, you should get paid.

    Soundexchange is basically ASCAP/BMI for digital performance rights in sound recording copyrights (the masters).

    I don’t see how any artist with a brain wouldn’t support that.

    There’s strength in numbers. It’s the only way you can get leverage on bigger players like Sirius. That’s why ASCAP was formed back in the day. Who has time to enforce performance rights and collect money themselves?