Digital performance royalties, administered by organizations like SoundExchange, are payments made to recording artists, performers, and record labels for the digital public performance of sound recordings. This includes performances on digital platforms like Pandora, SiriusXM, and other internet radio services.
When a song is streamed, the streaming service pays out royalties for two different things: The sound recording and the composition (the underlying body of work). When a sound recording is streamed on Pandora for example, it triggers a digital performance royalty. SoundExchange collects these royalties from the digital service providers and distributes them to the recording artists, featured performers, and copyright holders (usually record labels).
SoundExchange operates under statutory licenses set by the U.S. Copyright Royalty Board, which mandates the rates and terms for digital performances of sound recordings. These rates are determined through negotiation or arbitration and apply to all digital music service providers.
For recording artists and performers, digital performance royalties are an essential source of income, especially in the digital age where streaming has become a dominant form of music consumption. SoundExchange ensures that artists and rights holders receive fair compensation for the use of their recordings across various digital platforms.