What Is SoundExchange? A Guide for Musicians

If you’re an aspiring professional music performer, you’ve probably figured out that royalty payments are key part of your overall revenue stream. While there are several types of royalites out there, one major performance royalty stream you need to know about comes from non-interactive streaming rights, which are managed exclusively by SoundExchange.

If none of this makes any sense, don't worry, we're here to help. In this post we'll explain what SoundExchange is, how it works, and how you can sign up to the service to make sure you're getting all the performance royalties you're owed. Let’s break it down.

What Is SoundExchange?

SoundExchange is a nonprofit organization tasked with collecting and distributing performance royalty payments for sound recordings played on non-interactive digital platforms such as Pandora, SiriusXM, web radio stations, and more. Note this is different from interactive digital platforms such as Apple Music or Spotify.

Technically, SoundExchange is a digital performance license administrator, which means they're the intermediary between the people who own the copyright to a music master recording and those who want to play that recording for an audience. By law, SoundExchange is the only organization in the US that can collect performance royalties from non-interactive digital platforms.

SoundExchange tracks and collects from more than 3600 streaming platforms. As it would be impossible to personally track every single time your song plays on digital radio, SoundExchange handles it for you. They collect the money from the digital platform then pass it on to artists and rights holders (minus an admin fee).

SoundExchange also collects royalties internationally through agreements with other collection organizations around the world. So, if your songs are playing in other countries, SoundExchange has you covered.

What About Other Royalty Collection Agencies?

It's important to note that SoundExchange exclusively manages performance royalties from non-interactive digital platforms (e.g., digital radio). They are not involved in mechanical rights (e.g., physical media or digital downloads) or other performance rights (e.g., live performance or interactive streaming).

The difference is subtle, but important. Even if you're already collecting royalties for your streams, you're still missing out on non-interactive streaming royalties. For this, SoundExchange is the only game in town.

How Does SoundExchange Work?

By law, non-interactive streamers must pay SoundExchange for all the music they play. At the end of every quarter, streamers send a check to SoundExchange covering a percentage of their total revenue along with a detailed report of all the music they played throughout the period.

SoundExchange operates under the statutory license system, which means non-interactive digital services pay a set rate to legally stream your music. For example, Sirius XM pays SoundExchange 15.5% of their total revenue to be distributed as royalties.

Next, SoundExchange proportionally distributes that revenue based on the play data provided by streaming platforms. Unlike other royalty-collection organizations, SoundExchange has a strict policy to not pay third parties, instead paying directly to artists and rights owners.

Royalties are distributed based on percentages established by law:

• 45% to featured artists. These are the main performers on a recording. Even though you may not own the recording, you're still entitled to royalties.
• 50% to rights owners. These are typically labels, distributors, or administrators but might also be independent artists who own their master recording.
• 5% to non-featured artists. These are the session musicians and background vocalists performing on the recording.

How to Register with SoundExchange

Before you can get access to all those sweet royalties, you need to set up an account on SoundExchange. Here is an overview of the process:

1. Go to their website and signup. You’ll provide some basic details about yourself and your music. This is free and easy.
2. Provide tax and payment information. This ensures you receive payouts smoothly and everything is official with our friends at the IRS.
3. Claim your recordings. Use the search tool to find and verify which recordings belong to you.
4. Update your catalog regularly. Make sure to add your new releases to your account to avoid missing out on royalties.

One thing to keep in mind is that if you're not the rights holder of the recording, you should only sign up as the "featured performing artist." Your record label or distributor will register as the "rights holder" administrator to manage your account and pay your royalties directly to you.

Otherwise, that's all there is to it. If you have songs out there being played on non-interactive streamers, sign up now. You have nothing to lose!

Frequently Asked Questions

Here are a few common questions musicians have about SoundExchange:

I already use Spotify and Apple Music. Do I need SoundExchange?

Yes! Streaming services like Spotify and Apple Music pay different types of royalties (including mechanical and interactive streaming performance royalties). SoundExchange collects performance royalties from an additional 3600 non-interactive digital streaming platforms.

I'm already registered with ASCAP. Do I need SoundExchange?

Yes. ASCAP and other performance rights organizations collect and distribute royalties for the songwriter and publisher. In contrast, SoundExchange collects on behalf of the performing artist or sound recording rights holder.

I’m with a record label. Do I still need to register?

Yes! Labels are owed a share of royalties for the copyrighted music they hold, but SoundExchange pays artists directly for their portion of the royalties.

Is SoundExchange really worth it? I won't make very much.

You’ve already done the hard work creating the art, so you might as well collect the passive income, no matter how modest. Plus, signing up is free and easy, so you have nothing to lose.

I just heard about this. Will my royalties expire?

Unclaimed royalties stay in SoundExchange’s system waiting for artists to collect them, but they can expire after three years if unclaimed. Better to get to it sooner rather than later.

I don't want to use SoundExchange. Can I negotiate directly with non-interactive digital platforms?

Yes, you can. SoundExchange was created to protect artists who can't possibly track how their music is used — and to be sure they get paid for it. However, it's not designed to limit the rights of artists. You're free to negotiate any deal you want if it suits your interests.

Final Thoughts

If you’re a musician releasing performances digitally, registering with SoundExchange is a no-brainer. It’s free, easy to use, and ensures you’re collecting all the performance royalties you’re owed from non-interactive digital streamers. Don’t leave money on the table—sign up today and make sure you’re getting paid what's yours!

If you’re an aspiring artist seeking help with SoundExchange, distribution, and publishing, Sugo Music Group is here to help. With over 40 years of experience, Sugo helps artists publish and distribute music worldwide. By partnering with us, you can get your music the exposure it deserves and build the career you’ve always envisioned.