June 7, 2016Vol 3 | Issue 4

www.soundexchange.com1

SoundExchange Joins Music Community’s Call for a Copyright Law that Works for Musicians

In April, SoundExchange and 18 other music organizations urged the U.S. Copyright Office to reform the

Digital Millennium Copyright Act (DMCA) to stop the financial bleeding that recording artists and rights

owners suffer from as a result of outdated law.

YouTube and free ad-supported sites like it paid recording artists and record labels less in 2015 than they

earned from the sale of vinyl records, according to the New York Times.

Content owners face “an increasing onslaught of digital infringement,” the music community wrote in

In This IssueL E G A L N O T E S

SoundExchange Joins Music Community’s Call for a Copyright Law that Works for Musicians 1

How Low Can You Go? SoundExchange’s Administrative Rate Remains Under 5 Percent 3

M O N T H L Y T I P S & C U E S

Paying Music Creators is Our Primary Objective 4

O N T H E R O A D

SoundExchange, Artists Delve Into Issues During Billboard Latin Music Conference 5

Events 6

L E G A L N O T E S

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comments to the Copyright Office, placing the

burden on copyright owners rather than alleged

infringers to remove content. “[I]nstead of the

carefully balanced law passed by Congress, the

DMCA has now become a dysfunctional relic, not

suited to the realities of the 21st Century.”

The Copyright Office has acknowledged that

much has changed since Congress passed

the DMCA. Less than “5 percent of the world’s

population used the Internet, and bulletin board

services were the popular online platforms” when

the law took effect, according to the Copyright

Office.

The Copyright Office undertook a study to

evaluate the effectiveness of the safe harbor

provisions of the DMCA. When Congress passed the law 18 years ago, Internet service providers (ISPs)

were expected to work with copyright owners to address online copyright infringement. The copyright

owner would give “notice” to the ISP if the owner found his or her copyrighted material on a website

where it wasn’t authorized, and the ISP for that website would “take [it] down.” For ISPs who complied

with the “notice and take down” statutory requirement, the DMCA provided “safe harbor” limitations on

that ISP’s liability for copyright infringement.

Although this “safe harbor” might have made sense when Congress passed the DMCA, this “notice and

take down” regime no longer works for recording artists and rights owners. Specifically, SoundExchange

and its partners in the music community believe the DMCA’s “safe harbor” provision now acts as a shield

to services like YouTube from liability when users upload copyrighted material without permission.

The Copyright Office received over 92,000 comments on its study of the DMCA. The Office held public

roundtables in New York on May 2 and 3 and in San Francisco on May 12 and 13 to seek further input

on the study. While the office has no authority to change the law, it can issue a recommendation to a

congressional subcommittee that has been conducting a broader review of copyright law since 2013,

according to Bloomberg News.

L E G A L N O T E S

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How Low Can You Go? SoundExchange’s Administrative Rate Remains Under 5 Percent

Keeping SoundExchange organizationally lean, fiscally responsible and singularly focused on the

distribution of performance royalties allows us to keep our administrative rate below 5 percent.

As reported in our 2015 fiscal report, SoundExchange had an administrative rate of 4.6 percent that year.

The success story surrounding our low administrative rate has a lot to do with the fact that

SoundExchange is a digital native.

“We were established in the digital age to develop solutions for the global music community that boost

efficiency, accuracy and transparency,” SoundExchange President and CEO Michael Huppe said. “We

are introducing new technology and using innovative new solutions to benefit the recording artists and

rights owners we fight for and to benefit the broader music community.”

SoundExchange has leveraged cloud computing to support new hardware and software developments that

have helped us improve all aspects of our internal operations, from royalty processing to financial reporting.

Our focus on innovation also led us to develop the SoundExchange ISRC Search Site, which is

helping all parties through improved tracking and reporting of sound recording usage. The database

includes nearly 20 million International Standard Recording Codes ( ISRCs) reported to SoundExchange,

and the initiative helps ensure fast, accurate identification of sound recordings and results in music

creators receiving prompt, accurate and fair compensation from the digital services that use their music.

In addition to our willingness to adapt scalable technology and our forward-thinking efforts to establish

new solutions and state of the art technology for the entire music community, our fiscal prudence

is an important element of the broad strategy to keep our administrative rate low. That prudence is

responsible for our commitment to keeping our costs as low as possible.

“We pride ourselves on running a lean, agile organization. We are the driving force behind that

philosophy, and our entire organization understands how important it is to remain focused on the

collection and distribution of royalties,” Huppe said.

Guided by principles of transparency, efficiency and accuracy, and singularly focused on being good

stewards of creators’ royalties, SoundExchange intends to maintain administrative rates that are among the

lowest in the industry.

L E G A L N O T E S

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At SoundExchange, we get phone calls and e-mails every day from recording artists and rights owners asking for assistance

on a range of issues. Our Monthly Tips & Cues will help you by providing useful answers to common questions.

Paying Music Creators is Our Primary Objective

Question: When am I getting paid?

Answer: SoundExchange is the only sound recording collective management organization in the world

to offer monthly payments!

We distribute royalties at the end of each month to those who are paid via direct deposit and have an

account balance of at least $100. We also pay quarterly (in March, June, September and December) to

anyone whose account is set up to receive direct deposit that has accrued at least $10, or to anyone

whose account is set up to receive a paper check that has accrued at least $100.

If you are registered and haven’t yet reached threshold to receive a payment, stay tuned because

we will pay you once you reach that amount. If you haven’t registered yet, it’s easy with our online

registration!

If you’d like to speak to a member of our Customer Service team specifically about your account,

our team is standing by. You can reach us by phone at (800) 961-2091 or by email at

accounts@soundexchange.com Monday through Friday from 9 am-6 pm ET.

.

We’re here to take care of the business side of things so you can focus on what you do best – creating

the music we all love.

M O N T H L Y T I P S & C U E S

5 www.soundexchange.com | June 7, 2016

SoundExchange, Artists Delve Into Issues During Billboard Latin Music Conference

Latin recording artists benefit from the growth of

streaming, but more needs to be done to ensure

that music creators aren’t left behind.

SoundExchange President and CEO Michael

Huppe sat down with recording artists Chiquis

Rivera and Leslie Grace for a conversation about

digital music during the 2016 Billboard Latin Music

Conference in Miami.

Huppe, Rivera and Grace discussed how the shift to

streaming has benefited Latin artists. SoundExchange paid $56 million to Latin music recording artists

and rights holders in 2015, Huppe told The Miami Herald.

“Latin music is one of the music industry’s fastest growing segments,” Huppe said.

Huppe, Rivera and Grace also discussed how streaming services have the potential to help music

creators even more because Latinos rank among the most-savvy technology consumers in the country — 25

percent of Pandora listeners identified as Latin in 2015, the company said, with nearly 20 million unique

users per month. In addition, nearly 40 percent of Latinos listen every month, and Pandora is the top

streaming service among Latinos consumers, followed by YouTube, iHeartRadio and Vevo.

O N T H E R O A D

Chiquis Rivera speaks about receiving a check from SoundExchange.

SoundExchange President and CEO Michael Huppe leads a discussion at the Billboard Latin Music Conference on April 27 in Miami with Chiquis Rivera, center, and Leslie Grace, right. (Photo credit: Nicole Pereira Photography for Billboard.)

6 www.soundexchange.com | June 7, 2016

Increasing the royalties paid to Latin artists will require boosting registration and membership in

SoundExchange. To help, SoundExchange plans to unveil Spanish-language registration and provide a

fact sheet in Spanish.

“The digital revolution coupled with the increasing popularity of Latin music makes it imperative that we

make it as easy as possible for Latin artists to receive their royalties,” Huppe said.

Events

The Copyright Society of the USA Annual Meeting 2016

June 12-14

Boston, Mass.

A2IM Indie Week 2016

June 13-16

New York, N.Y.

O N T H E R O A D