SoundExchange, a non-profit collecting society for the distribution of royalties generated by digital radio airplay, has reached an important milestone: it has paid $1 billion to artists and record companies since its founding in 2000. 

SoundExchange is a performance rights organization that collects royalties from digital radio stations and similar platforms for streaming sound recordings. It is the only entity to collect and distribute digital performance royalties in the U.S. It collects money from digital radio stations like Sirius XM Radio and Pandora. For most labels and performing artists, this will be the only way to earn money from digital radio airplay. In the U.S., radio companies only pay songwriters and music publishers, not record companies.

In the first years, royalty transactions from SoundExchange were quite insignificant. However in 2004, SoundExchange collected $15.6 million. Last year, this amount increased to $292 million. Jagjaguwar Records, the record company of Bon Iver, made $95.000 from SoundExchange since 2007. According to Darius Van Arman, the founder of Jagjaguwar Records, SoundExchange  is "an increasingly vital source of revenue". It seems like digital radio finally becomes a significant source of income for the music industry. 

Not everybody is happy with SoundExchange, though. Sirius XM, which offers 140+ digital radio channels, sued SoundExchange because it would prevent Sirius from closing direct licensing deals with record companies. Those deals would allow Sirius to pay less than SoundExchange's rate. Sirius is not the only radio broadcaster that wants to close direct deals with record companies: two weeks ago, country radio broadcaster Clear Channel Communications announced an agreement with Big Machine, the record label behind Taylor Swift and other country acts. Those deals might devaluate the importance of SoundExchange to the music industry. 

Read more about collecting societies on FutureOfCopyright.com: 

• Brazilian collecting society ECAD faces fraud charges
• Dutch Parliament agrees on strict supervision of collecting societies
• China's new draft copyright law controversial among songwriters

Source: The New York Times