December 28, 2004


Old Songs Generate New Cash for Artists (BEN SISARIO, 12/28/04, NY Times)

The amount paid by SoundExchange, the sole collector and distributor of these royalties, is a fraction of what is made in royalties by composers and publishers from traditional radio, but it has grown significantly in recent years with the rise and expansion of the satellite radio services XM and Sirius.

The main difference with the new royalties, though, is that they are paid not to composers and publishers but to the performers - the singers and musicians in a song - and the copyright holder of the recording, which in most cases is a record label.

SoundExchange, a nonprofit agency in Washington, is authorized by the United States Copyright Office to collect royalties from digital broadcasters and pay them directly to performing artists. Founded in 2000 and initially part of the Recording Industry Association of America, SoundExchange made its first payments in 2001 and, after a slow beginning, has begun to double its annual collections; in 2005 it expects to collect and allocate $35 million.

But the biggest obstacle the agency faces, it says, is getting the word out to artists and registering them for payment. These royalties for new and unfamiliar formats are a category of payment that performing artists in the United States have never had: a performance right.

"This is a brand-new right," said John Simson, the executive director of SoundExchange. "A lot of artists are unaware of it, and we're working against 80 years of a music industry without a performance right." (In Europe and elsewhere around the world, performing artists are paid a royalty for radio play, but because the United States has not paid the fee in the past, it has generally not been reciprocated by other countries.)

In a practice well known to musicians and record companies but obscure to the public at large, traditional radio - or "terrestrial radio," as it is now known in the music industry - pays a royalty only to a song's publishers and composers, not to its performers or the owners of the recording itself. "When a typical Beatles song gets played on traditional radio," Mr. Simson said, "John and Paul get paid royalties, but not George or Ringo."

Musicians and record labels have long complained of this arrangement. In the 1990's, two federal laws established a royalty for performers for Web and satellite radio and digital music services like Muzak, DMX and Music Choice. The Digital Performance Right in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 established for the first time that the performers of a song and the copyright holder of the recording would be paid a special royalty separate from those paid to songwriters and publishers.

The rate for this royalty, set by the librarian of Congress, is 7 cents per song per 100 listeners, for most digital services. In the abbreviated nine-month accounting period of 2004, SoundExchange (which does not pay the composer or the publisher of a song; those royalties are paid by other agencies) distributed $17.5 million collected from satellite and Web broadcasters, Mr. Simson said.

That number is still tiny compared with the royalties paid from traditional radio - about $350 million a year, according to industry estimates - but it is growing fast.

Posted by Orrin Judd at December 28, 2004 8:40 AM
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