SoundExchange is a nonprofit established in 2003 to collect royalties for digital, non-interactive performances of sound recordings. The organization receives royalties from Internet radio services like Pandora as well as satellite radio service Sirius XM. It currently represents over 5,000 registered record labels and over 43,000 registered artists.
Billboard spoke with Huppe about his new role as well as SoundExchange's opportunities and challenges.
Billboard: You're replacing a very well liked, well known and respected president. What does Michael Huppe bring to SoundExchange?
Michael Huppe: First off, I couldn't agree more with your characterization of John. John and I are, and will always be, good friends. I can't speak highly enough about what he's done for this organization. Over the past 10 years he built this organization into what it is today. Both SoundExchange, and quite frankly the whole industry, owe a lot to him and his vision. In light of his decision to move on and do other things, I was flattered to be asked to succeed him and take SoundExchange into its next chapter.
I think in terms of what I bring to SoundExchange, I have a long history of working not only on the legal side but also beyond strictly legal issues. For the past several years I've worked hand-in-hand with John on a lot of the policy and strategic issues that are confronting the organization. I think I step into it with a pretty good understanding of what we've done, what we can become and the challenges that we face. We're already in the process of moving forward in some of those directions. Hopefully with me it will be a smooth transition with somebody who has knowledge of the organization, the industry and relationships across the industry that I think will help get us to the next level.
Billboard: Could you speak about the challenges and issues SoundExchange faces right now?
Huppe: We're in the fortunate position that our greatest success is also our greatest challenge. It's no secret that SoundExchange has grown faster than anybody could have anticipated in their wildest dreams. Our first distribution was back in 2003. It was $6.3 million covering five years -- a little over 1 million dollars a year. Since that time, the number of people listening to the type of music services we collect on has really exploded. In 2009, we distributed almost $150 million. For 2010 we're still finalizing everything, but 2010 will be record year.
With that explosive growth has come the growing challenges related to the massive amounts of data that we deal with, the massive amounts of payments and the massive amounts of people we pay. It's a good problem to have -- unbelievable growth leading to the need to scale up.
Another challenge we have -- again it's no secret, it's a challenge the whole industry has -- is the data problems and metadata problems across the industry. There is no single, authoritative place to go and find out everything you need to know about a sound recording. That causes problems for us and every other collecting society, quite frankly, and even entities other than collectives. So we're going to see what we can do to tackle that issue as well and try to move towards the creation of an authoritative database.
I think the third challenge is education. We're constantly striving to make sure people know who we are and what we do. And we want to get to a point when you're first signing up an act or artist as a manager or representative that signing up with SoundExchange is as core an act as all the other things that people do when they first launch a career.
Billboard: The data problem is something that comes up a lot when I talk with industry people. What specifically needs to happen for that to be fixed?
Huppe: I think there needs to be a coordinated effort across the industry to fix this problem. And, by the way, I'm not the first person and I won't be the last person to talk about the problem. When you think about venues for trying to solve that problem, SoundExchange, at least on the sound recording side, is the perfect place. Our board consists of 18 individuals representing almost everybody on the sound recording side of the business: artists, indie labels, major labels, managers, etc. The fact that we're the place they all come together to tackle issues like this makes us uniquely positioned to try to achieve the cooperation on that front.
The quicker we as an industry tackle the data problem the better the money starts to flow, the easier the licensing can become, the more efficient business models become. And quite frankly, the more enabled business models become. The beauty of the digital age is the unlimited scope of business models and business opportunities that are out there. But if you can't figure out how to compensate the people who deserve to be compensated, that's a pretty big hurdle.