The organization also distributed $959 million.
Michael Huppe
Charlie Gross*
In 2022, SoundExchange reported that collections fell slightly to $1.017 billion from 2021’s $1.06 billion — a decrease of about $43 million, or 4.1%. Likewise, distributions fell 3.4% to $959 million from 2021’s $993 million.
However, those collection decreases mainly appear to be due to either revenue or content payout declines from digital services in direct licensing arrangements with labels as well as from foreign collection societies.
Of the $1.017 billion in total collections, $813 million was derived from statutory royalties, while $204 million was paid to SoundExchange via direct licensing deals between labels and services and from foreign collection societies. That’s a drop from the prior year when statutory royalty payments to SoundExchange were $824 million and direct licensing payments were $236 million. So while the statutory royalties fell slightly by $11 million — a decline of 1.3% — the bulk of the decline, or $32 million, was due to a 13.6% fall in direct licensing payments and from foreign societies.
Overall, SoundExchange president/CEO Michael Huppe declared 2022 a “tremendous year” for SoundExchange, in a note leading the organization’s annual report.
“Living up to our mission to foster an equitable music industry where all creators can thrive, the company collected $1.017 billion digital royalties from more than 3,600 digital streaming platforms and distributed them to more than 600,000 creators and rights holders,” Huppe wrote in the note. “In doing so, the company crossed the $[10] billion threshold for distributing royalty payments since its inception in 2003.”
As a percentage of revenue, SoundExchange claims a 6.6% operating administration rate or a 7.2% consolidated administration rate. Either way, the organization claims it has “maintained one of the music industry’s lowest admin rates.
However, expenses grew a whopping 17.5% to $74 million from the prior year’s total of $63 million. While SoundExchange didn’t immediately respond to a request for comment, the cost increase could have been due to costs associated with upgrades to the organization’s technological infrastructure.
According to Huppe’s note in the annual report, SoundExchange also “unveiled a suite of next-generation solutions to make the business of music easier and fairer — including a new look, a new website that serves as a resource for creators, publishers, and digital service providers, and a mobile app to give creators easy on-the-go access to their accounts.”
Its expense structure is also undoubtedly impacted by finding and paying the correct rights holders, particularly on the indie artist side of things. According to a press release, “SoundExchange collects and distributes digital performance royalties on behalf of 650,000 music creators and growing.”
Finally, SoundExchange attributed the $10 billion in distributions to date to its “proprietary music tech solutions that turn data into accurate revenue.”
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