[Dixielandjazz] Royalties for Performers - Satellite & Internet radio

Steve barbone barbonestreet at earthlink.net
Wed Dec 29 08:20:22 PST 2004

For Band Leaders, Musicians, Radio Station Operators:

This is probably too good to last but check out the below article.
"SoundExchange" is collecting and paying "performer" royalties. A very good
reason to give your CDs to Satellite and Internet radio stations.

Plus, if they play them, you'll not only make money, but you'll help expand
the audience for Dixieland.

Steve Barbone

December 28, 2004 NY TIMES - By BEN SISARIO

Old Songs Generate New Cash for Artists

Three years ago, the singer and songwriter Suzanne Vega received a $41
payment from an agency called SoundExchange. It was so small she did not
notice it in the accounting from her manager. The next year the payment was
bigger, and bigger still the year after that.

"Now it's up to $800," she said by telephone from her home in Manhattan. "I
wasn't even aware of it until recently."

The money Ms. Vega received was royalties earned from satellite and Internet
radio, a growing source of income that many artists and record labels are
just beginning to notice.

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

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

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. The two leading satellite radio systems, XM and Sirius,
which began broadcasting in 2001 and 2002, respectively, added a substantial
number of listeners this year. XM says it has more than two and a half
million subscribers, and yesterday Sirius announced that it had passed one
million subscribers.

Barry M. Massarsky, a music industry economist and a consultant for
SoundExchange, predicted that total revenue from satellite radio alone would
increase by 6 to 10 times over the next five years.

"Based on our research from August 2004," he wrote in an e-mail response to
a question, "forecasts for satellite radio revenues alone eclipse $2 billion
by 2008 and $3 billion by 2010." Current revenue estimates for satellite
radio are about $300 million for 2004, he said. Most of the money comes from
subscription fees.

But because of the novelty and unfamiliarity of the performance royalty,
SoundExchange has had a difficult time getting artists to sign up for the
service, and in many cases it is searching for performers to pay. The agency
has a list of more than 30,000 artists to track down who are owed payments
ranging from $50 to $5,000. Mr. Simson said.

Some of those artists, like D'Angelo, Nine Inch Nails and Men at Work, are
well known and have just not filled out the necessary paperwork. But the
whereabouts of many performers, particularly the ones no longer involved in
the music business, are unknown. Among those being sought by SoundExchange
are members of the 60's garage-rock bands the Beau Brummels and the Blues
Magoos, the girl group the Shangri-Las, the young Italian singer Laura
Pausini and the heirs of Dinah Washington and Mantovani.

SoundExchange had a deadline of Friday, to sign up artists for its first
accounting period, covering Feb. 1, 1996, to March 31, 2000. But there were
so many artists yet to be found that this month the agency's board voted to
extend the deadline to July and maybe further, Mr. Simson said.

The details of payments for the performance royalty are still being fine
tuned. By law, 50 percent of the royalty goes to the copyright holder of a
recording, 45 percent goes to its "featured performer" and the remaining 5
percent goes to nonfeatured musicians like backup singers and session
players. This distinction brings yet more complications for SoundExchange.

"There are recordings where it's unclear who is the featured performer," Mr.
Simson said. "Like with rap, a song might be billed as Lil Jon featuring
Usher featuring someone else. There might be two or three featured artists
on the recording. Do we send all the money to one artist or divide it in
three? Our preference is to have an artist tell us, but in many cases we
don't know."

The new income stream from SoundExchange has taken many performers and
record labels by pleasant surprise.

"It's like manna from heaven," said Bruce Iglauer, the president and founder
of Alligator Records, an independent blues label in Chicago. He said the
label's most recent payment from SoundExchange, received last month, was
between $5,000 and $10,000.

"That's not a huge amount of money," he said, "but that'll pay the studio
bill for a record."

The artists who stand to gain the most from a performance right are
performers of pop classics and oldies standards who never received radio
royalties before but, since hits from decades past stay in rotation, could
collect significant amounts of money.

Carl Gardner, one of the original singers in the Coasters, sang on "Yakety
Yak," "Charlie Brown," "Searchin'," "Poison Ivy" and other radio staples but
did not write the songs, so he never collected a royalty when they were
played on the radio. (Those songs were written by Jerry Leiber and Mike
Stoller, who own their own publishing rights.)

Now 76, Mr. Gardner lives in Port St. Lucie, Fla., with his wife, Veta, who
is also his manager. She heard about SoundExchange and signed her husband
up. Mr. Gardner said his first check from SoundExchange, a couple of years
ago, was for about $300, and the amount has increased steadily since.

"It's peanuts," he said. "But every little bit helps."

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