What Is SoundExchange: Who Collects Your Digital Performance Royalties

The organization and its mandate

SoundExchange is the U.S. organization Congress designated to administer the Section 114 statutory license, which governs the digital performance of sound recordings on non-interactive services. As described on SoundExchange's website, it collects digital performance royalties from services including SiriusXM, Pandora's free radio tier, internet radio stations, and cable and satellite TV music channels, then distributes those royalties to featured artists and sound recording rights owners.

That mandate is precise: SoundExchange administers royalties for the sound recording (the master) from non-interactive digital services. If you are a songwriter who does not own the master recording of your compositions, SoundExchange is not collecting on your behalf for those recordings. If you are asking about royalties from Spotify or Apple Music on-demand plays, SoundExchange is not involved in that payment chain.

Understanding what SoundExchange is not collecting is as important as understanding what it is.

Non-interactive vs. interactive digital services

The distinction between non-interactive and interactive digital services is the legal line that determines whether SoundExchange is the relevant royalty collector.

A non-interactive digital service is one where the listener receives a stream of programmed music without selecting specific tracks on demand and without meaningful ability to skip freely. SiriusXM satellite radio, Pandora's ad-supported radio tier, internet radio stations, and music channels on cable TV systems are examples. These services operate under the Section 114 statutory license established in U.S. copyright law. Under that statutory license, the services can play sound recordings without negotiating individual licenses with each rights holder, but they must pay statutory royalty rates set by the Copyright Royalty Board. SoundExchange collects and distributes those payments.

An interactive on-demand streaming service is one where the listener chooses specific tracks, creates personalized playlists, and has substantial control over what they hear. Spotify, Apple Music, Tidal, Amazon Music Unlimited, and YouTube Music are interactive services. They are not covered by the Section 114 statutory license and do not route royalties through SoundExchange. Their royalty obligations run on separate structures, typically license agreements with rights holders or distributors for master royalties, and through the MLC (Mechanical Licensing Collective) and PROs for composition royalties.

The statutory split: who gets what

The royalty distribution model for SoundExchange payments is established by statute. Under 17 USC 114(g), digital performance royalties administered by SoundExchange are divided as follows:

• 50 percent to the sound recording copyright owner. This is typically the record label. For an independent artist who owns their masters outright, this 50 percent share belongs to the artist in their capacity as rights owner.
• 45 percent to the featured artist on the recording, regardless of who owns the master. Even if a label owns the master and receives the 50 percent share, the featured artist is entitled to their 45 percent directly from SoundExchange, not filtered through the label's recoupment accounting.
• 5 percent to non-featured musicians and vocalists who performed on the recording, distributed through the AFM and SAG-AFTRA Intellectual Property Rights Distribution Fund.

The featured artist's 45 percent is a statutory right, not a contractual one. As SoundExchange's documentation for artists and labels describes, this means the featured artist receives their share directly from SoundExchange regardless of the terms of any recording contract with a label. It cannot be recouped against an advance or withheld by the label.

For an independent artist who writes, records, and owns their masters, the math is straightforward: 50 percent as rights owner plus 45 percent as featured artist equals 95 percent of the total digital performance royalty. The remaining 5 percent goes to non-featured performers if any were involved; if the recording is solo, it goes to the AFM/SAG-AFTRA fund regardless.

What SoundExchange does not collect

Clarity on the scope is essential before you start evaluating whether you are leaving royalties uncollected.

SoundExchange does not collect:

Composition royalties. The underlying song (melody, lyrics, structure) is a separate copyright from the sound recording. Performance royalties for compositions from radio play and streaming are administered by PROs (ASCAP, BMI, SESAC in the U.S.). Mechanical royalties for compositions from on-demand streaming are administered by the MLC. Neither of those flows through SoundExchange.

On-demand streaming royalties. Spotify, Apple Music, and similar interactive services pay master royalties directly to distributors and labels, not through SoundExchange. If your music is distributed through DistroKid, TuneCore, CD Baby, or a similar platform, your Spotify and Apple Music master royalties are being collected by your distributor. SoundExchange is not in that chain.

Live performance royalties. Live performances are administered separately through PROs (for the songwriter's composition) and do not involve SoundExchange.

YouTube music video views. YouTube has a separate Content ID system and licensing structure for music videos and user-generated content. SoundExchange does not administer YouTube royalties.

How independent artists register

For an independent artist who owns their masters, registering with SoundExchange requires two separate registrations: as a featured artist and as a rights owner. Both registrations are free.

Registering only as a featured artist collects the 45 percent share. The 50 percent rights owner share sits in the system as unclaimed until a rights owner registration is made for those recordings. Registering only as a rights owner misses the 45 percent featured artist share. Independent artists who own their masters should complete both registrations and link their recordings to both accounts.

As SoundExchange's registration guidance for artists and labels describes, the registration process requires providing your artist name, the sound recording catalog you are claiming, and relevant account and payment information. SoundExchange holds royalties for unregistered artists, and registration allows you to claim past royalties subject to applicable timeframes.

If you have never registered and your music has been played on SiriusXM, Pandora radio, or internet radio for some time, it is worth checking SoundExchange's search tool to see whether there are unclaimed royalties in your name before beginning the registration.

Letters of Direction

One additional mechanism worth knowing: Letters of Direction (LODs). These are written instructions from a rights owner to SoundExchange directing that a portion of the rights owner's share be paid to a specific third party, typically a producer, mixer, or recording engineer who negotiated a participation in the master's royalty income as part of their fee arrangement.

As described in SoundExchange's documentation on Letters of Direction, an LOD does not require SoundExchange to be a party to the underlying deal between the artist and the producer. It simply tells SoundExchange how to route a specified percentage of the rights owner's 50 percent share. If you have agreed in writing to pay a producer a percentage of your master royalties from digital performance, an LOD with SoundExchange is the mechanism for honoring that commitment automatically.

How royalty rates are set

SoundExchange does not set its own royalty rates. The rates paid by non-interactive digital services are established by the Copyright Royalty Board (CRB), a three-judge panel within the U.S. Library of Congress that conducts formal rate-setting proceedings every few years. These proceedings are the mechanism for adjusting the per-stream and per-channel rates that services such as SiriusXM and Pandora pay for the use of sound recordings.

As copyright.gov's overview of the Copyright Royalty Board process describes, the CRB process allows rights holders, services, and other interested parties to submit evidence and arguments before judges set rates that will govern the next multi-year period. The rates are then implemented by SoundExchange as the designated administrator. This structure means that an independent artist's per-play royalty from non-interactive digital radio is set at the statutory level; it is not individually negotiable, and no artist or label receives preferential rates outside the compulsory license framework (with the exception of separately negotiated direct license agreements, which exist outside the statutory license mechanism).

For independent artists, the practical implication is that SoundExchange's role is administrative rather than negotiating: it ensures the statutory rates are collected and distributed correctly to registered rights holders and featured artists. Whether the rates themselves are adequate is a policy question that is litigated in each CRB proceeding.

SoundExchange's scale and the importance of registration

SoundExchange has distributed more than $13 billion in royalties since its founding and distributes approximately $1 billion per year, as reported on SoundExchange's homepage. For independent artists whose music receives meaningful play on non-interactive services, this royalty stream is real and uncollected only because of a missing registration.

The barriers to registration are low: it is free, online, and does not require a label affiliation. The barrier to leaving royalties on the table is even lower: simply not knowing SoundExchange exists or not understanding that the featured artist share and the rights owner share require separate registrations.

If your music is on non-interactive digital services and you have not registered with SoundExchange in both capacities, that gap is worth closing.