SoundExchange Flirted With a Billion in Payouts to Artists and Labels in 2018

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SoundExchange paid out $952.8 million to artists and labels last year, the most it has ever distributed since the organization began. That represented a $300 million, or 46.1 percent increase over the prior year when it paid out $652 million.

SoundExchange's collections and thus payments had fallen in 2017 due to Pandora cutting direct deals with labels and paying them directly, leaving it to only handle the artist share of payments from that service.

The collection organization, which manages royalty payments and play reports from digital and satellite services using programmed music, also had a strong fourth quarter also: It distributed to master recording rights holders and artists nearly $345 million, a 115.7 percent jump over the nearly $160 million it paid out in the prior fourth quarter of 2017.

SoundExchange didn't explain the jump in payouts but in June SoundExchange agreed to a $150 million settlement with SiriusXM concerning outstanding claims from January 2007 through December 2017. At the time, SoundExchange president and CEO Michael Huppe said in a statement, "The settlement allows us to distribute additional royalties to SoundExchange's artists and rights owners while avoiding additional costly litigation." Apparently, the organization made good on the promise.

Besides the possible SiriusXM royalty payments, SoundExchange might have also caught up on some payments that were due to rights holders but hadn't been paid du to data and account issues or inadequate paperwork or due to rights owners still needing to be registered. At the end of 2017, SoundExchange held $527 million, of which $294 million was due to such issues.

In fact, SoundExchange reported that it distributed royalties to 34,048 payees during the year, a 37.3 percent increase from the prior year when it said it made payments to 24,795 payees. In the fourth quarter, it said registrations from artists signing up increased to 8,353 from 8,096.

Unlike most other collection organizations, SoundExchange usually doesn't release its collection information when it announces its distributions so for now the 2018 revenue total is unknown.