SoundExchange CEO: ‘If you present your case properly,  you can have increases’


In the NY:LON Connect 2023 conference’s Global Neighbouring Rights session, SoundExchange CEO Michael Huppe was interviewed by Will Page, author of Tarzan Economics and former chief economist at both PRS For Music and Spotify.

Page started with a slightly provocative statement: the four countries on earth where FM radio does not pay artists are Zimbabwe, North Korea, DR Congo, and the USA.

He asked Huppe why royalty payments for neighbouring rights are so complex – for instance: if a US artist records a song in France, and it is then played on US radio, the artist will now receive a payment.

Huppe agreed that the system is “irrational from a policy perspective, and is an arcane approach to getting paid that relies on location and nationality.”

SoundExchange, he said, distributed 42% of neighbouring rights – and that distribution “depends on which button you press when choosing to listen.” If you listen to Bruce Springsteen on FM radio , he said, there are no neighbouring rights payments, but if you listen via webcast or satellite radio, there are.

“Sine waves means Bruce doesn’t get paid, but digital encoding –via web or satellite – means that he does!”

Huppe continued: “Every territory has different laws and different ways of measurement – and different rates. So if you represent an artist, it can be a nightmare.” SoundExchange’s job is to help navigate this byzantine network.

Page then asked about the artist membership growth at SoundExchange. 400,000 members have joined since 2014 – to a total of over 650k accounts, with 3,000 more accounts added each month. Huppe explained that annual payouts have grown from $200m in 2014 to $1bn now.

The explosion in the amount of music being released, due to lower barriers to entry, means intense competition.

“The problem is,” he said, “that it gets harder to get the data issues right. You don’t join a band so your database can be right! But it’s the oil of the engine in the music industry.”

Huppe then turned his attention to lean-back streaming, which Page pointed out, is worth more money than people think. “A lot of what we do is to focus on non-interactive streaming. In the US there’s a compulsory licence for that, and we administer it.”

Huppe was pleased with what SoundExchange had achieved in pushing this license rate much higher: “It’s a government rate-setting process, but we have achieved some of the highest rates in the world.”

While SiriusXM now pays SoundExchange substantial sums, he explained it was not always so. The compensation artists receive today is the result of advocating for increasing the statutory rate before the U.S. Copyright Royalty Board. 

“If you present your case properly, you can have increases.” Collective negotiation works, Huppe said, “but it’s still not high enough – we’ll keep fighting.”

Huppe also addressed a recent EU High Court ruling which affects how PROs that collect money within the EU pay rightsholders.

“Now foreign creators need to be treated the same as EU creators. It was a big case for us. The bottom line is that, if you are a territory in Europe, you need to pay out neighbouring rights regardless of nationality. It’s common sense and fair, I think. What we fight for is to get fair treatment and to make sure that American creators get paid when their music is used.”

Looking to the future, Page asked Huppe which kinds of technology would help SoundExchange develop. Here, Huppe expressed some frustration. “We could send a man to the moon 60 years ago, but we can’t find out who wrote a certain song?”

SoundExchange is particularly interested, he said, in the monitoring and sampling technology that is used to calculate song usage, and “in the way that sampling takes place to determine which songs have been used. It’s fraught with problems. So we’re looking for tech that addresses the system of estimates or proxies.”

Payment is also a big area that artists want improvement in. “Speeding up payment is important too. A song that is streamed today, you may not get that money for 18 months or longer. There’s no excuse for that. 90% of our payments are out in 45 days,” he explained, adding that the methods of payments also need to evolve to match the needs of creators.

“Last month we announced we can pay on some mobile payment apps in the US like Cash App. We need to meet the creator where they are – and they are on their phones. Many don’t even have checking accounts any more!”

Finally Huppe said that he believes that in the future, real-time song matching and payment could be a reality. “You can imagine a world where you could reconcile every night, based on the plays that happened on your song that day.” 

This article was updated on 19/01 to include corrected information from SoundExchange on the SiriusXM webcasting statutory rate.

The NY:LON Connect global music summit is run by Music Biz and Music Ally. This year’s event is held in association with Orfium and Viberate, and hosted by Reed Smith. The Global Neighbouring Rights track is sponsored by SoundExchange. You can find all our coverage of the conference sessions here.

Written by: Joe Sparrow