SoundExchange Asks U.S. Trade Rep to Help Artists Get Paid Abroad

SoundExchange says that U.S. music creators are losing out on $170 million per year in royalties from the use of their sound recordings abroad.

Rights management agency SoundExchange is asking the Office of the U.S. Trade Representative (USTR) to help American music creators get paid fairly for the use of their work abroad.

SoundExchange -- which is designated by the Library of Congress to collect and distribute performance royalties for non-interactive digital music streams -- provides equal treatment to music creators, regardless of nationality, in the distribution of royalties. In other words, it follows the principle of "full national treatment," which ensures that one set of laws in a country equally protects both domestic and foreign works and recordings, including the payment and collection of royalties.

But in a new filing with the USTR for its annual "Special 301" review of intellectual property rights protection, SoundExchange says that six countries deny full national treatment to American producers and performers, because "those countries are not paying them for the same uses that these countries are paying their own national producers and performers" -- specifically, for traditional broadcasts, public performances and some digital uses.

The countries are the U.K, France, Australia, Japan, the Netherlands and Canada.

All of the six countries are World Trade Organization members, and thus bound by the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS), which requires national treatment protection. But SoundExchange says that the countries are using loopholes in TRIPS to deny U.S. artists that treatment. For example, because public performances of sound recordings on streaming services and digital radio didn't exist when TRIPS was written in the early '90s, those recordings are not per se protected by TRIPS.

As a result, SoundExchange claims that American recording artists and labels are losing out on $170 million per year in royalties from use of their sound recordings abroad. 

The agency adds that while it doled out $100 million in combined payments to those six countries for U.S.-based streams of their music creators' work in 2018, the same countries only sent a combined $3.8 million in royalty payments to SoundExchange for American music creators that year.

"In the U.S., our law treats all creators equally," SoundExchange president/CEO Michael Huppe tells Billboard. "Foreign artists receive the same royalties as U.S. artists. We’re simply asking our trading partners to compensate American music -- some of the most valuable and popular recordings in the world -- to the same extent they compensate their local repertoire. It’s not right that we send $100+ million in royalties to these six countries, but receive only $3 million in return. It’s as simple as that."

While SoundExchange notes that other countries are similarly denying U.S. creators full national treatment, it says it singled out those six as "the largest markets for the music industry where this is occurring, and thus the focus of this filing."

SoundExchange is pressing the USTR to "engage in bilateral discussions" with each of these countries about incorporating full national treatment into their policies. It also recommends that the USTR place Canada in particular on its 2020 Watch List, since Canada will be required to provide full national treatment under the U.S.-Mexico-Canada Agreement (USMCA) free trade agreement, once fully implemented.

Click here to read a summary of SoundExchange's comments, and here for the full comments.