SoundExchange 101: What Every Independent Artist Needs to Know

If you're an independent artist with music on streaming platforms, there's a good chance you're leaving money on the table. Not because your music isn't earning — but because there's an entire royalty stream that most indie artists don't even know exists.

That royalty stream is called digital performance royalties, and the organization that collects them is called SoundExchange.

What Is SoundExchange?

SoundExchange is a nonprofit organization designated by the U.S. Copyright Royalty Board to collect and distribute digital performance royalties. These royalties are generated when your music is played on non-interactive streaming services — platforms where the listener doesn't get to choose exactly what plays.

Think of it this way: when you press play on a specific song on Spotify, that's interactive streaming. When Pandora's algorithm plays your song as part of a station, that's non-interactive streaming. SoundExchange handles the royalties from that second category.

Which Platforms Pay Through SoundExchange?

The list is longer than most artists realize. SoundExchange collects royalties from:

• Pandora — one of the largest sources of SoundExchange royalties
• SiriusXM — satellite radio generates significant royalties for featured artists
• iHeartRadio — the digital arm of iHeart's radio network
• Music Choice — the music channels on cable TV systems
• Stingray Music — commercial background music services
• AccuRadio, SomaFM, and hundreds of webcasters
• Non-interactive features on Spotify and Apple Music — yes, even interactive platforms have non-interactive elements (like radio features) that generate SoundExchange royalties

How Much Money Are We Talking About?

SoundExchange has distributed over $10 billion in royalties since its founding. In recent years, they've been distributing over $1 billion annually.

But here's the critical part: billions of dollars remain uncollected because artists and rights holders haven't registered. That money sits in a pool, waiting for someone to claim it. If you don't register, your share eventually gets redistributed to other registered rights holders.

The exact amount you'll earn depends on how much your music is being played on these platforms. Some artists earn a few dollars per quarter. Others — especially those with songs that have been in rotation on Pandora or SiriusXM — could be sitting on thousands of dollars in uncollected royalties.

The 50/45/5 Royalty Split

SoundExchange distributes royalties in a specific split mandated by law:

• 50% goes to the sound recording copyright owner (the label, or the artist if self-released)
• 45% goes to the featured artist(s)
• 5% goes to non-featured artists (session musicians, backup vocalists) through AFM and AFTRA funds

Here's what most independent artists miss: if you own your masters and you're the featured artist, you're entitled to both the 50% owner share and the 45% artist share — that's 95% of the royalty. But you have to register as both a sound recording copyright owner AND a featured artist to collect both shares.

SoundExchange vs. Your PRO (BMI/ASCAP)

One of the most common points of confusion: how is SoundExchange different from BMI or ASCAP?

BMI and ASCAP collect performance royalties for songwriters and publishers (the composition). They cover radio, TV, live venues, and streaming.

SoundExchange collects digital performance royalties for sound recording owners and featured artists (the master recording). They cover non-interactive digital streaming only.

These are completely separate royalty streams. Being registered with BMI does not mean you're collecting SoundExchange royalties, and vice versa. You need both.

SoundExchange vs. Your Distributor

Another common confusion: doesn't my distributor (DistroKid, TuneCore, etc.) handle this?

No. Your distributor collects royalties from interactive streaming platforms like Spotify and Apple Music. SoundExchange collects from non-interactive platforms. These are separate systems with separate payments. Your distributor does not register you with SoundExchange or collect those royalties on your behalf.

How to Register

Registration with SoundExchange is free. Here's what the process involves:

1. Create an account at SoundExchange.com
2. Register as a featured artist — this lets you collect the 45% artist share
3. Register as a sound recording copyright owner — if you own your masters (most independent artists do), this lets you collect the 50% owner share
4. Register your catalog — add your tracks with correct ISRC codes, artist names, and release information
5. Set up payment — configure direct deposit or check payment preferences

The process is straightforward but requires attention to detail. Incorrect ISRC codes, misspelled artist names, or missing tracks mean royalties can't be matched to your account. This is one of the main reasons artists work with an administrator — to make sure everything is registered correctly from the start.

Common Mistakes to Avoid

• Only registering as an artist (not as a copyright owner): You'll miss the 50% owner share — the bigger piece of the pie.
• Not registering your full catalog: SoundExchange can only pay you for tracks that are registered. If you have 50 songs but only registered 10, you're missing royalties on 40 tracks.
• Wrong ISRC codes: ISRC codes are how SoundExchange matches plays to your registrations. Incorrect codes mean lost royalties.
• Waiting too long: SoundExchange holds uncollected royalties for a limited time. After that, they get redistributed.

How Traxx Can Help

We handle the entire SoundExchange process for our clients — registration, catalog submission, payment setup, and ongoing monitoring. We make sure your account is set up correctly, every track is registered with the right metadata, and your royalties flow on schedule.

If you've been releasing music without SoundExchange registration, there may be uncollected royalties waiting for you right now. We can help you find out.