Since its inception, SoundExchange, the organization that collects royalty payments from digital music services like Pandora, has brought in more than $900 million–$292 million of which it collected last year alone. But how much of a cut does SoundExchange take for itself? Nothing, other than for operating and administrative costs.
SoundExchange is a non-profit that’s rapidly growing to become one of the most important organizations in the music industry. For many labels, it’s the No. 2 source of digital revenue only behind iTunes. And for president Michael Huppe, it’s now more important than ever that organizations at the center of collecting and distributing so much artist revenue–from satellite and Internet streaming services–are non-profits, especially as Google enters the field with its acquisition of RightsFlow last month. “Believe me, there’s many a day that it would be great to just have our staff vested in options,” Huppe says. “But that’s not what we do. We’re a non-profit because we want to do the right thing, and because we’re not solely driven by whatever maximizes our bottom line. You don’t come to a non-profit to get rich.”
Huppe’s main mission is to track down rights holders and distribute royalty payments–a surprisingly difficult mission. Though registering with SoundExchange is a simple and free process, many artists have not claimed their royalties–one very famous R&B artist, says Huppe, had unclaimed royalties in the six figures just waiting to be collected. But after reaching out through myriad channels, the artist repeatedly avoided collecting his or her earnings. “You wouldn’t believe what we do to find artists, and there are a lot of folks we have found, and for whatever reason, they haven’t registered. I can’t tell you why you wouldn’t register to get free money,” Huppe says. “We see people, call them up, and say, ‘Hey! We have money for you!’ Maybe we sound like a Nigerian bank scam?”
The organization has an outreach team devoted to delivering royalty payments, whether by contacting labels or managers, take advantage of its board members’ connections, or working with other royalty payment services. At the annual SXSW festival, for example, SoundExchange gets an advanced list of the artists slated to play, and then matches the lineup against its database of unregistered artists. “We put posters all around saying, ‘Hey, do any of you know these bands? Send them to our booth–we got money for them!'” Huppe says.
