SoundExchange Letters of Direction: What Artists Agree to Redirect

Say your producer agreement gives the producer 5 percent of a named royalty stream. After the mix, a SoundExchange form arrives with 5 percent in the box. A familiar number. But what does it touch? The form may draw from a different pool. Check the base before you sign.

A SoundExchange Letter of Direction (LOD) lets a Featured Artist tell SoundExchange to pay part of that artist's sound-recording performance royalties to an eligible creative participant. A producer, mixer, engineer, or remixer may receive a stated portion of the Featured Artist allocation for recordings listed on the form.

The percentage comes from your allocation, not every dollar SoundExchange distributes. The current LOD instructions say the form expresses a percentage of the Featured Artist's share. A Repertoire Chart names the recordings covered. One line can decide whether a track is included.

The percentage comes from your share

Suppose your SoundExchange account is due $100 in Featured Artist royalties for a covered recording. A 10 percent direction sends $10 of that allocation to the eligible participant, leaving $90 for you before unrelated adjustments. The numbers are hypothetical; they isolate the base the percentage uses. Read the denominator out loud: 10 percent of the Featured Artist share.

That is not 10 percent of every master royalty or your publishing income. SoundExchange says the LOD comes from the Featured Artist allocation, rather than being paid off the top before royalties are allocated to the artist. Its Featured Artist LOD FAQ describes the form as a direction to pay part of the Featured Artist's sound-recording performance royalties to a creative participant.

Your producer agreement does the bargaining. The LOD handles the route. Your agreement should state what the producer earns and which revenue line supplies it; the LOD tells SoundExchange where to send a specified share for listed tracks. It doesn't create a master-ownership deal, settle a disagreement over the producer's entitlement, or redirect a composition royalty.

If a contract promises 10 percent of net master receipts, don't assume that signing an LOD for 10 percent of your Featured Artist allocation fulfills the same promise. The words may match while the royalty pool doesn't. Our producer fee and advance explainer covers how the written deal defines those payment choices. In its artist-dispute guidance, SoundExchange says it won't interpret third-party agreements or decide who is entitled when a dispute arises.

Check the recipient and every recording

SoundExchange's LOD route is for non-Featured creative participants. The current instructions name producers, engineers, mixers, and remixers. A session musician or backup singer can't receive payment through this LOD process; labels, lenders, royalty-advance companies, and other parties outside the creative participant role aren't eligible payees. A company can receive payment only when it's solely owned by the creative participant.

One form can cover multiple recordings or releases by the same Featured Artist. It can't combine allocations from different Featured Artists. If two artists share a recording and a producer is to receive a portion of both artists' allocations, each Featured Artist must provide an LOD for their own share. If the direction applies only to one artist, the other artist's allocation stays outside that instruction.

The Repertoire Chart is where you make the scope concrete. It lists the artist or group, track name, effective date, ISRC if available, and percentage of the Featured Artist's share. One recording can appear on more than one release; SoundExchange's instructions say an LOD follows that recording across those releases. Read the chart against the agreement and your distributor's metadata. A typo in an ISRC or an omitted track can leave the intended recording outside the direction.

The percent also has a precise meaning here. It's a percent of the artist's allocation, not a fraction of a percentage point and not a general percentage of all the royalties from a release. If the form uses a different base than the signed producer agreement, pause and get the terms reconciled in writing.

Set the date and send the complete form

The LOD asks for an effective date. If different recordings should begin on different dates, the Repertoire Chart handles those entries. SoundExchange's producer, mixer, and engineer FAQ says LODs aren't retroactive unless the form specifically indicates otherwise. If the producer expects a share of earlier royalties, don't rely on a conversation or an assumption; state the intended date and confirm how SoundExchange will process it.

Download the current LOD and Repertoire Chart from SoundExchange or through SoundExchange Direct. Submit both as a complete, signed package by email or through the account portal. SoundExchange says a complete and valid LOD takes at least two weeks to process. An electronic signature needs a DocuSign Certificate of Completion or equivalent; paper forms sent by mail or fax can take longer. The submission instructions list the current routes.

Activation also isn't the same thing as a payment date. The creative participant receives payment in a later distribution period when the account reaches a payable amount. If a recording's Featured Artist royalties are in dispute or temporarily ineligible, a signed direction can't make that balance payable. Keep a copy of the executed form and chart, then check that SoundExchange has applied them to the intended recordings.

Five details to read before you sign

• Find the exact producer-agreement clause and name the royalty pool it uses.
• Confirm the LOD percentage is taken from your Featured Artist SoundExchange allocation.
• Match each covered recording by title and ISRC when available.
• Check the payee, company ownership if relevant, signatures, and effective date.
• If past royalties are part of the deal, make sure the form states the requested date and SoundExchange confirms its treatment.

If the agreement's ownership or payment language is unclear, ask for a written clarification before signing; get qualified music-law help when the disputed term changes who owns a recording or who is owed money. The LOD is a payment instruction, so keep its scope narrow and legible.

A percentage only becomes a real instruction when the form names the person, the royalty pool, and the recordings.