I remember about six years ago when a relatively unknown organization, Soundexchange, contacted us (CPA entertainment business managers) about signing up one of our music artist clients. They said that our client was not collecting all music royalties through ASCAP, UMG, EMI, etc. Instead, there were an increasing amount of royalties being left on the table from certain digital transmissions like streaming.
I was skeptical. However, according to some industry opinions, the public’s method of listening is changing. This is confirmed in the most recent growth of digital music in the last 3-4 years. According to How Artists get Paid for Internet Radio: An interview with Mike Huppe, President of Sound Exchange by Chris Castle, “More and more people are accessing music through digital devices, mobile devices and through streaming content rather than downloading it. The article also informed me that “Soundexchange pays performers directly, regardless if they are recouped through their record deal.” (“Recoupment” is the method of recovering monies advanced to the artist before any royalties are paid out to them.)
So, what does this mean to you?
- Make sure you have good representation in your contracts. You can lose a substantial amount of money because of a poorly-worded contract.
- You don’t have to be a CPA entertainment business manager to know what you don’t know. Even though you are an artist, you should at least know the basics of your industry. There are a number of good reference books that speak of the music industry. After that, leave the rest to your attorney and CPA entertainment business manager.
- If you receive substantial royalties payments, don’t be afraid to hire an auditor that specializes in music royalties. You must keep the payers honest.
Music artists and writers have the best copyright laws in our nation’s history. Don’t squander it by sticking your head in the sand.