We get a lot of questions asking us what the differences are between what Songtrust does, and what SoundExchange does. This makes sense - both companies collect royalties, both names start with an S...but the difference becomes clear when you realize that Songtrust & SoundExchange collect different types of royalties for different parts of a song and for different rightsholders. Here’s what you need to know about what SoundExchange does versus what Songtrust does.
SoundExchange and Neighbouring Rights
SoundExchange collects sound recording royalties and recorded digital performance royalties for sound recording copyright owners and featured recording artists when their music is played on non-interactive broadcasters. Sound recording copyright owners are typically record labels, but this can be anyone who has financed a recording - like a DIY artist or bedroom producer. Featured artists are the main artist or band on a record. Other performers, like session musicians or backing vocalists, also receive royalties.
A non-interactive broadcaster operates via satellite or internet and provides a pre-programmed listening experience. Non-Interactive means you can’t choose the music you want to listen to or create a playlist. Pandora or SiriusXM are classed as non-interactive broadcasters because you can’t curate the listening experience. Spotify or Apple Music, for example, are interactive.
SoundExchange splits royalty payments into three. The sound recording copyright owner will receive 50% of any royalty income, the featured artist on the recording receives 45% and the remaining 5% is split between the session musicians who played on the record.
The term “Neighbouring Rights” is a collective term to describe sound recording copyrights and recorded performance rights outside the U.S. Neighbouring rights are always associated with the copyright of a song -- rights “next to” (or “neighbouring”) the “main copyright”, if you like.
It’s oddly specific that SoundExchange collects from non-interactive broadcasters only, but there’s a reason for it. Unfortunately, the U.S. doesn’t recognize neighbouring rights the same way other territories do. In Europe for example, neighbouring rights are recognized in copyright law, and so, performers and sound recording copyright owners in European territories can collect royalties owed to them when their recorded performances and sound recordings are broadcast, as well as any publishing royalties.
In the U.S., this isn’t the case. American performers and sound recording copyright owners can’t collect royalties when their performances and sound recordings are played on typical broadcasters like terrestrial radio. The Digital Millennium Copyright Act came into force in the U.S. in 1998 which meant that certain service providers - non-interactive digital broadcasters - were obligated to pay royalties to sound recording copyright owners and featured artists for the use of their sound recordings. Soon after, the Recording Industry Association of America (RIAA) set up SoundExchange to collect and distribute these royalties.
In European territories, neighbouring rights are collected by certain PROs and neighbouring rights collection organizations like Phonographic Performance Limited (PPL) in the UK.
SoundExchange, now independent from the RIAA, represents the sound recording rights of more than 245,000 rights owners. In Q1 of 2021 alone, the independent organization collected and distributed $245.5 million to rights holders, and since its inception in 2000 has distributed $7 billion in recorded performance and sound recording royalties. As a performer or sound recording copyright owner, registering with SoundExchange, or your country’s neighbouring rights organization, is crucial.
Songtrust takes care of royalties associated with music publishing rights, or compositional rights, which are the rights to the underlying music and lyrics of a song. We collect mechanical and performance royalties when a song has been publicly performed, broadcast, streamed, or synced to social media and distributes them to the relevant rights holders - typically songwriters and music publishers or anyone who has a stake in music publishing rights is owed publishing royalties.
Another reason some confuse SoundExchange and Songtrust is that the term “performance royalties” is used in reference to royalties each entity collects. But in this case, they’re referring to different types of performance royalties. Songtrust refers to the performance royalties when a composition - music and or lyrics - is performed, while SoundExchange always refers to the recording of the performance.
Plain and Simple: You Need Both
The key differences between Songtrust and SoundExchange are the different types of royalties they collect. Songtrust will collect publishing royalties - mechanical and performance royalties, generated from the exploitation of music copyrights (the composition), whereas SoundExchange will collect sound recording and recorded performance royalties from non-interactive broadcasters.
This table outlines the fundamental differences between the two services, and shows that you need both services to collect all the royalties your songs earn.
One, Two, Three, Four
There are four steps every music rights holder needs to take when setting up their royalty collections.