Business

How SoundExchange's Reverse Bounty-Hunters Are Getting Artists Paid: 'We Become Stalkers'

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As the DIY community grows, and international artists cross over to U.S. listeners, the royalty-collecting organization is finding creative ways to track down unregistered artists.

Earlier this year, independent Canadian country singer Carolina East received a mysterious phone call: Someone wanted to transfer her thousands of dollars in what they said were unclaimed royalties for U.S. streams of her music.

East was hesitant to hand over her banking information, having received similar messages from scammers before. But the call was from SoundExchange, the rights management nonprofit designated by the U.S. Congress to collect and distribute performance royalties for non-interactive digital music streams. Those come from platforms like SiriusXM or Pandora, which are now one in the same company.

After taking out a small administrative fee (it fluctuates, but in 2018, it was 3.8%), SoundExchange gives 45% of the remaining money to the featured (here meaning prominent) artist, 5% to the non-featured artists (such as backing musicians) and 50% to the copyright owner, typically a record label.

East, 36, says her first check made her “comfortable for the year.” “I was skeptical,” she adds. “But now that I know that there’s a U.S. market for my music, who knows? Maybe I can plan a tour.”

SoundExchange has been calling up unregistered artists who are owed funds since its establishment in 2003, but it is still left with a pile of unclaimed money each year (its payout rate is 96%). Now, as the DIY music industry continues to grow -- and at a time when it’s harder than ever for artists to make a living on recording and touring alone -- the organization’s industry relations team is getting creative.

“One of the major goals is to make sure as many of those dollars are out the door as possible,” explains Linda Bloss-Baum, senior director of artist and industry relations. “We go to great lengths to reach out. We become stalkers, to some extent.”

A presence at major conferences and festivals is a must. At South By Southwest in Austin last March, SoundExchange staffers flew an enormous banner with the names of around 150 unregistered artists on-site. “People [would] take a picture of the banner and say, ‘Hey buddy, your name was on this list!” says Bloss-Baum.

Then, this fall, SoundExchange rebooted its regional outreach program by hiring a small team of representatives in each of five music-rich cities: Austin, Nashville, Atlanta, New York and Los Angeles. Those reps expand on SoundExchange’s primarily Washington, D.C.-based industry relations team by tracking down local artists who may not be registered with SoundExchange -- or even know it exists. In L.A., regional reps attend weekly local School Night showcase; in Nashville, they post up at the free concert series Musicians’ Corner.

The organization is also partnering with state government music programs, like the Texas Music Office and Portland Music Commission, to help spread the word. And it is in the process of updating its website to make it easier for registered artists to see all recordings currently associated with their accounts, and claim recordings in the organization’s pending and unmatched database.

“There’s not just one way into the music tent anymore,” says SoundExchange president and CEO Michael Huppe. “There are many different ways, and we’ve got to be there getting the artists early on, so they don’t miss a penny of what they’re owed.”

Another new registrant, Chinese-Australian singer and Create Music Group signee Wengie, says it took her five minutes to sign up. "As an emerging artist, my team and I invest a lot of time and energy into creating our music," she adds, "so it's super helpful for SoundExchange to administer and collect payments on our behalf."

Outreach is particularly important -- and complicated -- for international artists, who often don’t realize SoundExchange is collecting their royalties in the U.S., regardless of their citizenship.

Matthew Limones, SoundExchange’s Miami-based manager of artist & label relations, uses social media and technology to his advantage. When he met Colombian singer Farina’s manager, Artie Pabón, for dinner recently, he had Pabón introduce him to Farina over iPhone FaceTime on the spot. “A formal introduction through a friend’s FaceTime is probably one of the most unique ways we can connect,” he says.

He doesn’t shy away from in-person meetings, though: Another time, he flew to San Juan to personally explain SoundExchange specifics to Puerto Rican trap star Bad Bunny. “I try to make [Latin artists] understand that the law in the United States protects them,” he says, and both Bad Bunny and Farina are now registered.

Limones also tries to reach artists before they hit it big, a process he says means acting “kind of like an A&R.” When he saw the glamorous music video for Karol G’s 2016 song “Casi Nada,” he immediately got in touch with the singer’s father (she didn’t have a manager yet). “I was like, ‘this girl is going to be it,’” Limones says. “If you’re going to be spending this much time on an artist registration, you have to pick your time wisely.”

Courtesy of SoundExchange
From left: Limones, Karol G and SoundExchange senior media relations manager, Sandra Rodriguez, in Las Vegas in November 2019.

Thanks in part to its increased outreach efforts, SoundExchange distributed $256 million across 42,775 rights-holders in the third quarter of 2019, a 22% increase compared to the same time last year. The organization also registered 8,411 new creators in the third quarter and Bloss-Baum says that just 45 of them represented $2 million of the total payout.

Another $10 million went to creators of pre-1972 recordings, after the Music Modernization Act in October 2018 closed a loophole that left them out of coverage under federal copyright law.

What happens when SoundExchange has tried all outreach options, and still can’t track someone down? The organization will hold unclaimed money for at least three years, after which it begins releasing a portion of those royalties across all SoundExchange members as a refund on administrative fees, which it does proportionally, based on royalties earned. Those are pool releases, typically done at the end of the year.

But success stories still far outnumber those of unclaimed funds, and members of SoundExchange’s outreach team say that helping artists collect their first SoundExchange check is the best part of the job.

One of Bloss-Baum’s favorite stories: Nashville singer Sarah Darling used her first SoundExchange check to fly to a funeral overseas, and ended up meeting her husband during the trip. Adds Huppe: “There are stories of bands who are on the verge of maybe hanging it up, and we got them their payment, and it was the thing that allowed them to keep going.”

But even better, says Limones, is when artists share their SoundExchange stories with each other.

“When people get their checks, they talk,” he says. “Who doesn’t want a check in the mail?”