Answers/Royalties/What Is SoundExchange and Do Independent Artists Need It?

Royalties

What Is SoundExchange and Do Independent Artists Need It?

By Boboy Watson·Last verified August 31, 2026·1,932 words·Royalties

SoundExchange is the collector most independent artists have never heard of, which makes sense — it covers a corner of the market that feels like it belongs to a previous era. It does not. I went about four years releasing music before I registered, and the thing that finally pushed me was realising that a Pandora station play and a Spotify play are collected by two completely different organisations.

What does SoundExchange collect, exactly?

SoundExchange collects the digital performance royalty on the sound recording from non-interactive digital services in the United States.

Two words in that sentence do all the work. Sound recording means SoundExchange is on the master side of the split, alongside your distributor, not on the composition side where ASCAP, BMI and The MLC operate. Non-interactive means the listener cannot choose the specific track that plays next.

The royalty exists because of a statutory licence: services like Pandora and SiriusXM do not negotiate with every rights holder individually. They pay a rate set through the Copyright Royalty Board, SoundExchange collects it centrally, and SoundExchange distributes it to registered artists and recording owners. That is why the money sits in one place with one registration, unlike sync or on-demand streaming.

What counts as a non-interactive service?

A non-interactive service is one where the listener influences what plays but does not select it. If you type a song title and hear that song, the service is interactive and SoundExchange is not involved.

Notice that Pandora appears on both sides of that table. The tier matters, not the brand. A Pandora station spin is SoundExchange money; a deliberate on-demand play on Pandora Premium is distributor money.

Why doesn't Spotify pay through SoundExchange?

Spotify does not pay through SoundExchange because Spotify is an interactive service, and interactive services license recordings directly rather than under the statutory licence SoundExchange administers.

When a listener picks your track on Spotify or Apple Music, the recording royalty flows from Spotify to your distributor — DistroKid, TuneCore, CD Baby or whoever you use — and then to you. SoundExchange never touches it. This is the single most common confusion I see: people register with SoundExchange, watch their Spotify numbers climb, see nothing arrive from SoundExchange, and conclude the registration was pointless. The registration was fine. Spotify was never the source.

Why does SoundExchange pay the featured artist directly?

This is the genuinely unusual part, and it is the reason SoundExchange is worth caring about even at small numbers.

Under 17 U.S.C. 114(g)(2), the statutory digital performance royalty is split three ways before it ever reaches a label:

The 45% featured artist share does not pass through the label's accounting first. In almost every other royalty stream — on-demand streaming, downloads, physical — a signed artist's money goes to the label and reaches the artist only after recoupment. SoundExchange is the exception written into the statute. An artist with an unrecouped album balance still gets the SoundExchange featured artist share.

If you self-release, you are the featured artist and the sound recording owner, which means registering in both capacities collects 95% of the royalty on your own recordings. Registering in only one capacity leaves the other share sitting unclaimed.

How is SoundExchange different from ASCAP, BMI and The MLC?

SoundExchange, ASCAP, BMI and The MLC are four different organisations collecting four different royalties, and none of them substitutes for another.

Fees are as of August 2026. The important structural point: SoundExchange and your distributor sit on the same side of the copyright — both collect on the recording — but they cover different kinds of play, so they never overlap and never make each other redundant. Being with DistroKid does not cover you at SoundExchange, and being registered with BMI does not either, because BMI is on the composition side entirely.

Does US terrestrial AM/FM radio pay SoundExchange?

No. The United States does not grant a general public performance right in sound recordings for over-the-air broadcast, which means an AM or FM station in the US pays the songwriter through ASCAP, BMI or SESAC and pays the performer and the master owner nothing at all.

That is a genuine gap in US law and it surprises people every time. A song played 500 times on a commercial FM station generates performance royalties for whoever wrote it and zero for whoever recorded it. SoundExchange exists because digital transmissions — satellite, cable and internet — were given a performance right that terrestrial broadcast still lacks.

The practical version: SoundExchange money comes from the internet and the satellite, not from the dial.

How much does it cost to register with SoundExchange?

Registration is free. SoundExchange's own wording on its registration page is "Registering is free, simple, and fast." There are no annual dues, no processing fee, and no charge to register additional recordings later.

That puts SoundExchange in the same category as The MLC — free to join, no reason to delay — and unlike BMI, where affiliating a publishing company costs $175 for an individual publisher, or ASCAP, where the writer and publisher accounts are $50 each as of August 2026.

Does SoundExchange have a payout threshold?

SoundExchange does not publish a payout threshold on its public registration pages, and I am not going to guess at one. If someone quotes you a specific SoundExchange minimum, ask them where it came from.

For contrast, The MLC does publish its minimums: US members are paid at $5 by ACH, $100 by physical check and $250 by wire, and payments land roughly 75 days after the end of each monthly usage period. That transparency is the exception rather than the rule.

Does my distributor register me with SoundExchange?

No distributor does this as part of standard distribution. DistroKid, TuneCore and CD Baby deliver your recordings to stores and collect the on-demand streaming income; none of them registers you as a SoundExchange payee by default.

Some distributors sell it as an add-on. CD Baby has offered SoundExchange registration bundled inside a paid product rather than including it in the base $9.99 single or $14.99 album fee. DistroKid's Publishing add-on is a different thing again — it collects composition royalties, including global digital public performance from non-interactive radio on the publishing side, which is not the same as the recording-side money SoundExchange holds for you.

The safe assumption is the correct one: if you did not register with SoundExchange yourself, you are not registered.

What do you need to register with SoundExchange?

1. Your legal name and address, plus the artist name your recordings are credited to.
2. The capacity you are registering in — featured artist, sound recording owner, or both. Self-releasing artists should select both.
3. A list of your released recordings with ISRCs. Your distributor issues the ISRC for each track; DistroKid, TuneCore and CD Baby all display them in the release details.
4. Bank details for payment, plus US tax information.
5. Any recordings released under a different artist name, side project or production alias, because those register separately and are easy to forget.

The whole thing takes about ten minutes. Then treat it like your PRO and MLC registrations — every new release gets added, not stockpiled for a catalogue cleanup you will never schedule.

Does SoundExchange collect royalties from other countries?

Not automatically. SoundExchange's core collection is the US statutory digital performance royalty. Foreign neighbouring rights — the equivalent performance income generated when your recordings are played by broadcasters and services overseas — are collected by each country's own society.

SoundExchange operates an international royalties service that collects that foreign income for members who opt into it. It is a separate election, not a side effect of registering domestically. If your listener map shows meaningful traffic outside the United States, it is worth looking at; if 95% of your plays are domestic, the domestic registration is the part that matters.

Should you bother at your size?

The cost is zero and the setup is roughly ten minutes, so the question mostly answers itself.

The practical case for registering now rather than later is that radio-adjacent placements arrive without warning. A curator adds you to an internet radio rotation, a track gets picked up on a SiriusXM specialty channel, or a Pandora station starts seeding your song to listeners of a similar artist. Registered, that generates royalties attributed to you. Unregistered, the plays still happen and the money still gets collected — it just has no claimant attached.

Registering while you are small is the cheap version of this. Registering after a placement is the version where you have already missed some.

What happens to SoundExchange royalties nobody claims?

SoundExchange holds royalties it has collected but cannot pay out, because the featured artist or the sound recording owner has never registered. That money does not vanish on day one and it does not go to a competitor — it sits, and SoundExchange runs public searches so that artists can find their own names on the list of recordings with money waiting against them.

The catch is that it only works if somebody eventually looks. Plenty of independent artists have a small unclaimed balance sitting under a project name they stopped using in 2019, and the way to find out is to search your artist names, your production alias and any band you were a member of. Registering closes the loop going forward; the search is what recovers what already accumulated.

What SoundExchange does not collect

Being precise about the gaps is what stops people from assuming they are covered when they are not. SoundExchange does not collect:

• Spotify, Apple Music, Amazon Music or YouTube on-demand streams — those are your distributor's job
• Any composition royalty — public performance goes to ASCAP, BMI or SESAC, and US mechanicals go to The MLC
• US terrestrial AM/FM radio — no US performance right in the recording exists for broadcast
• Sync fees for film, TV, games or advertising — those are negotiated deals, not statutory royalties
• Foreign neighbouring rights, unless you have opted into the international service

Four collectors, four registrations, and no single one of them is a substitute for the others. SoundExchange is the one nobody tells you about, and it is free, which makes skipping it the worst deal in the stack.

I am an artist who has been through this process, not a lawyer or an accountant. Statutory shares and registration steps are described here as of August 2026 — check SoundExchange's current documentation before relying on any summary, including mine.