Before 1995, Sound Recording Copyright Owners (SRCOs) in the United States did not have a performance right in any medium. This meant that, unlike their counterparts in most of Europe and other nations around the world, artists and copyright owners did not get paid for the public performance of their works. Service providers used and made money from those works at will, without a dime being paid to the rightful owners of those recordings or the featured artists who performed the recordings that create the backbone of their business.
The Digital Performance in Sound Recordings Act of 1995 and the Digital Millennium Copyright Act of 1998 granted a performance right in sound recordings in some kinds of digital media. As a result of this forward step, copyright law now requires that certain users of music pay the copyright owner of the sound recording for the public performance of that music via certain digital transmissions. Recognizing the excellent work SoundExchange was doing, the U.S. Copyright Office designated SoundExchange as the sole administrative entity for subscription services’ statutory license fees. The Copyright Royalty Board – which governs the fair market rates for recordings – reaffirmed SoundExchange’s sole collective status in 2007.
SoundExchange is the principal administrator of the statutory licenses under Sections 112 and 114 of the Copyright Act. SoundExchange participates in each periodic rate-making proceeding under the Section 112 and 114 licenses to establish rates that appropriately compensate copyright owners and performers for the exploitation of copyrighted sound recordings. Such rate-setting proceedings may be resolved through voluntary multi-party settlements or proceedings involving the Copyright Royalty Board. SoundExchange also participates in Copyright Office rulemakings to establish the terms governing how services operate under the two statutory licenses.