SoundExchange announced Tuesday it distributed $117.5 million of digital performance royalties in the first quarter. The amount was a first-quarter record for the organization but was down from the $122.5 million and $134.9 million distributed in the third and fourth quarters of 2012, respectively
Sound“Our first quarter numbers show that this digital radio revenue stream is continuing to grow," said SoundExchange President, Michael Huppe in a statement. Internet radio, satellite radio and cable radio services pay statutory royalties for the performance of sound recordings. SoundExchange distributes those royalties to record labels, performing artists and non-featured musicians via a fund administered by the American Federation of Musicians and the American Federation of Television and Radio Artists.
Because SoundExchange distributions don't match exactly the royalties that are accrued in a given quarter, the amounts distributed may not always show the growth in digital radio from one quarter to the next. But when viewed over multiple quarters (see above), it's clear that Internet radio and satellite radio, SoundExchange's two main revenue categories, are growing at a healthy rate. The most recent distributions are nearly 34% greater than the $88 million in the third quarter of 2011.
SoundExchange collects royalties only from services that have elected to use the compulsory license allowed by U.S. copyright law. Thus, SoundExchange will not collect royalties when a service has negotiated directly with a record label. Apple is negotiating direct licenses with record labels and will pay royalties directly to record labels. SiriusXM has made direct deals with dozens of independent labels and Clear Channel has made a handful of direct deals with independent labels.