July/August 2005

SoundExchange: Royalty Pain

More than 30,000 performers have yet to register with SoundExchange (SX) to claim their portion of more than $40 million in unpaid royalties. If these artists do not register with SX by July 31, they will forfeit their rights to their royalties, in accordance with regulations issued by the U.S. Copyright Office. The office established regulations that artists have three years after SX identifies them as recipients of unclaimed royalties before their royalties can be forfeited and spread out among the other artists, according to SX Executive Director John Simson. "The board of directors may make a further recommendation to extend the deadline when they meet in June," Simson says. But he also says, "I really urge anyone to claim by July 31 because there is a chance they may lose it."

SX collects revenue for owners of the sound recording rather than for the owners of the copyrighted musical work, i.e. the song itself. The nonprofit, government-licensed company handles royalties for cable and satellite subscription services (DMX, Music Choice, Muzak), noninteractive Web-casters (such as Internet-only radio stations and retransmissions of FCC-licensed stations) and satellite radio (XM and Sirius). SX does not administer royalties for digital downloads or traditional analog performances, including television and radio.

Many of the artists who are owed royalties simply do not know this money exists. "My largest unpaid list has a huge amount of Latin and other types of music, such as Hawaiian, that aren't as likely to be getting royalty checks [from record companies]," Simson says. "On the Internet and with satellite [radio], there's a lot of music, especially blues and jazz, being downloaded. [SX] is a way for these musicians to make some money off of it. There's no upfront cost so it's like 'found' money."

Some of the jazz musicians who stand to collect their portion of these royalties but have yet to register with SX include Walter Beasley and Ronny Jordan. More information is available at soundexchange.com.

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