Someone Else Is Getting Your Royalties

Someone Else Is Getting Your Royalties ArticleIt’s hard being a music producer these days, everyone knows that record sales are way down.With that said, it’s increasingly difficult to get paid for your work as a producer. If you’re one of the lucky few who have been blessed to get some music out listen up, there’s money out there that belongs to you!! The only problem is they (The Sound Exchange) won’t give it to you. Let me explain..First off what is the Sound Exchange?

The Sound Exchange is a non-profit performance rights organization that collects performance royalties for sound recording copyright owners (SRCOs), featured and non-featured artists.

The Sound Exchange collects and distributes royalties from statutory licenses for sound recording copyright owners, including:

  • Digital cable and satellite television services (Music Choice and Muzak)
  • Non-interactive “webcasters” (including original programmers and retransmissions of FCC-licensed radio stations by aggregators)
  • Satellite radio services (XM and SIRIUS

So if you’re music is played on any on the above, including internet radio you generate a royalty.

But there is a catch.

The Sound Exchange only pays out this royalty to SRCO’s (The Label) and “featured artist,” “featured recording artist,” “contract artist,” “royalty artist,” or “featured performer”, identified most prominently in print on, or otherwise in connection with, the sound recording actually being performed.

What this means, is they are basically only paying the label and the artist who’s name appears mostly on the record.Now how fair is that?

The main issue with the Sound Exchange is they aren’t treating producers as “performers” on sound recordings.

According to the US Copyright office a sound recording results from the fixation of a series of musical, spoken, or other sounds. The author of a sound recording is the performer(s) whose performance is fixed, or the record producer who processes the sounds and fixes them in the final recording, or both.

So if the US copyright office says that producers are also performers, and there would not be a “sound recording” without us (the producers), why aren’t we getting paid directly as the featured artists do?

I contacted the Sound Exchange, and they stated that the “artist” whose name appeared most prominently would have to sign a “letter of direction” so that royalties can be paid to the producer for their performance contribution. A letter of direction is basically a letter granting a certain percentage of monies to be paid to a third party.


So after all our hard work, it’s up to the artist to decide what/when I get paid?

Basically yes.The artist has to grant the Sound Exchange permission, through a letter of direction, to pay producers.Of course this is extremely unfair as without our contribution, a sound recording wouldn’t even exist!

To add insult to injury, if you produced a record in 2005, and did not get a signed letter of direction until 2011, guess what?The Sound Exchange doesn’t pay retroactive royalties, so you miss out on all of the revenue during the period of 2005-2011.You would basically have to contact the artist to pay you out of the proceeds they already received (and possibly already spent).This can of course turn into a legal nightmare, and destroy any type of working relationship you might have with an artist.

To help my fellow producers combat this Sound Exchange royalty debacle, here are a few tips.

  1. Make sure you are registered at the Sound Exchange.

Registration is a critical step to insure getting paid. No registration, no money, it’s as simple as that.

        2.  Get your contracts and letters of directions signed from artist as soon as possible!

At the end of the day it all comes down to the paper work. If your production contracts/agreements, don’t make provisions for letters of direction for the Sound Exchange you are potentially missing out on income.In this day of internet radio, Pandora, etc, you don’t need to have a “single” to be streamed online. It’s also important to make sure the percentages of the song are accurate and signed off on.

        3.  Make sure the Artist(s)/Performer(s) Name(s)/Credits are accurate on distributed media.

From my experience, the Sound Exchange can only be as good as the data it receives.If songs aren’t accurately identified, there no way to insure you can get paid. You don’t want your money falling into an “unknown” category.

The Sound Exchange distributes millions in royalties, so make sure you take the necessary steps to get whatever money may be owed to you. Remember to be diligent in getting the necessary paperwork to insure your success in getting paid.

Jugrnaut is a music industry consultant, songwriter/producer and member of the platinum production team Arkatech Beatz. Be sure to check out the website www.arkatechbeatz.comwhich features music production tips, insight into the music industry, and info on marketing music online.