SoundExchange Distributes Record $153 Million in Q3, Celebrates 10-Year Anniversary

SoundExchange set another record for distributions in the third quarter, sending $153.7 million to record labels and artists in the third quarter. The figure was 25.5% greater than the same period last year and 74.7% above the $88 million distributed in the third quarter of 2011.

The news was released in SoundExchange's announcement of its 10-year anniversary. Since it first distributed royalties in 2003 -- it paid just $3 million for the entire year -- SoundExchange has paid out more than $1.5 billion in digital performance royalties. Established in 2000 as a division of the RIAA but now an independent entity, SoundExchange is the sole organization with the ability to collect and distribute statutory royalties from three types of non-interactive digital music services: webcasters, satellite radio and cable radio.

Statutory digital performance distributions have exploded as streaming music has become more widely adopted. Back in 2003, Pandora was still business-to-business service Savage Beast Technologies and Sirius Satellite Radio and XM Satellite Radio had about 1.8 million subscribers between them (Sirius XM, the post-merger company, now has over 25 million subscribers). “Music is more accessible now than ever before; today, a single sound recording can be streamed millions of times by listeners across the globe," said SoundExchange President and CEO Michael Huppe, in a statement.

SoundExchange may grow beyond its current charter. Legislation introduced this week by Rep. Mel Watt, titled the Free Market Royalty Act, would extend the performance right to broadcast radio and authorize SoundExchange to collect and distribute non-interactive performance royalties for both broadcast and digital services. Of course, the bill must travel far, and get through a Congress with many larger issues, before it becomes law. But SoundExchange is already moving behind digital performance royalties. The partnership between Clear Channel and Warner Music Group, through which artists will receive a share of both broadcast and digital revenues, will route payments through SoundExchange.

Regardless of what happens with the legislation, SoundExchange is well positioned for more growth. Internet radio is growing well -- a new Edison Research study says 53% of online Americans age 12 and over listen to Internet radio (that figure also includes on-demand audio services like Spotify). SiriusXM is showing strength due to growing auto sales and a new program to improve its adoption in the used auto market. And SoundExchange could end up handling royalties for more direct deals like the Clear Channel-Warner Music Group partnership.