Digital Audio Insider -- the economics of music and other digital content

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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.

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May 07, 2009 vs. SoundExchange
by David Harrell
No, as far as I know, isn't tangling with SoundExchange, the nonprofit agency that collects performance royalties for sound recordings for Internet radio play (as well as digital cable and satellite radio).

But in a comment to yesterday's post on's Q1 2009 royalties, David Rose asked how the radio royalties we've received from compare to those we've received from SoundExchange.

Short answer: I don't know.

Here's why: SoundExchange doesn't log every single song played on every single Internet station -- it uses a sampling method to assess overall Internet play for artists and tracks. So far, despite regular airplay on Internet stations like SomaFM (and a fair amount of terrestrial/internet college radio play over the past few months -- our recent album "The Space Between" made the top 30 airplay charts for more than a dozen stations), we haven't been picked up by any of SoundExchange's sampling surveys.

When we are, we'll have to make a choice about collecting radio royalties from When you sign up for's artist royalty program, you have to indicate if you're collecting Internet radio royalties via SoundExchange in the U.S. or PPL in the U.K. If you are, doesn't pay them directly. If not, you can opt to receive them. (This royalty is completely separate from the fees paid for "on demand" streams -- SoundExchange only collects for non-interactive plays, you can still receive on demand royalties from even if you're receiving Internet radio royalties from SoundExchange.)

If we show up in SoundExchange (I assume it will happen eventually), we'll have to decide: Are we better off having ALL of our radio plays counted (and paid for by, or relying on SoundExchange's sampling surveys to capture our radio plays, along with those from other stations/sites?

According to the SoundExchange website (can't link directly to the page -- the site is, unfortunately, built in Flash), in 2009, commercial stations must pay 0.18 cents per listener for each performance of a track. That's more than the .04995 cents we received directly from for free radio plays, but less than the 0.4 cents we received for the few "premium radio" of our songs in the first quarter. (I haven't stayed on top of the Internet performance royalty debate, so if anyone has more details on the current SoundExchange royalty rates and/or where they're going, please let me know.)

So far, the dollar amount is small enough that the "direct from vs. signing up with SoundExchange" decision is an academic one. My guess is that our total royalties for 2009 will be less than $100, so we're unlikely to miss out on much with either approach. I can't helping thinking, however, that at our level, 100% of our plays will put more in our pockets than an unknown percentage of our total Internet plays.

One last thing -- I just found the following information on the SoundExchange website:
…your membership in SoundExchange does not in any way limit your ability to enter into direct (i.e., nonstatutory) licenses of any sound recordings that you own, whether with webcasters or other potential statutory licensees. SoundExchange simply requires that SRCOs notify it of any direct licenses entered into with statutory licensees or digital music service providers so that it can ensure that payments received from services that hold direct licenses to certain recordings are calculated correctly and allocated properly.
However, there's nothing on the website regarding direct payments for SoundExchange members and I doubt would want the headache of sorting out payments that way.

related: Royalties for Q4 2008


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    Out Now -- "Maybe Next Year" -- The New Holiday Album:

    <a href="">Joy To The World by The Layaways</a>

    "This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium

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    "...about as melodic and hooky as indie pop can get." -- Absolute Powerpop

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    "The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music

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