SoundExchange Expanding Into Private Copy Royalty Collection in the U.S.

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SoundExchange, the nonprofit appointed by the U.S. Congress to collect and distribute performance royalties for non-interactive digital music streams, is expanding its operation to encompass domestic and foreign private copy royalties, it was announced today.

The step is described in a press release as “part of SoundExchange’s multi-year technology initiative centered on leveraging the use of data to streamline systems and increase efficiency across the music industry.”

The organization will take over the collection and distribution of private copy royalties in the U.S. from the Alliance of Artists and Recording Companies (AARC), which will cease operations after distributing all available royalties it has collected since 2018 later this year.

SoundExchange plans to begin claiming international private copy royalties in late 2021 and domestic private copy royalties in February 2022.

“We are committed to leveraging our best-in-class technology solutions to enhance the music ecosystem,” said SoundExchange president and CEO Michael Huppe in a statement. “Expanding into private copy royalty collection and distribution is just one step in our mission to make the business of music simpler and more efficient for creators.”

Private copy royalties, also known as private copy levies, are assessed on the sale of devices and media which allow consumers to copy music for private use, including CD-Rs, blank cassette tapes, MP3 players, hard drives, memory sticks, smart phones, satellite radio recording devices and more. These royalties are then distributed to rightsholders by one or more collective management organizations (CMOs), often according to market share.

The types of devices subject to private copy royalties vary by region. In the U.S., they apply to the sales of CD-Rs, personal audio devices, media centers, satellite radio devices and automobile systems that have recording capabilities. The total amount of these royalties generated in the U.S. is low compared with Europe, where participating countries tend to apply private copy royalties to additional devices not covered by U.S. copyright law. Indeed, the European region accounted for over 90% of the over $1.2 billion in private copy royalties generated around the world in 2018. That seems large relative to the entire global biz in 2018 as reported by the IFPI.

 
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