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SOUNDEXCHANGE'S MICHAEL HUPPE OPENS UP

SoundExchange CEO Michael Huppe describes the work he does for the music-biz nonprofit as “a cause.”

Indeed, the affable exec with a legal and academic background—he also teaches music law at Georgetown—can sound downright evangelical when expounding on subjects like fair payment, transparency and the barriers to entry for small players.

While you might know the organization as those nice people who get you paid for sound performances on SiriusXM and Pandora, Huppe is emphatic about the org’s larger role, which he describes as advocating for the value of music and the interests of the entire biz. He and his team (call them SX for short) believe they provide a forum for the larger community in addition to their royalty collection and dispensation, data services and advocacy work.

The entity was born with the mandate to “operationalize” (as Huppe puts it) the performance right for recordings granted by a Congressional vote in 1995. “Today we are a full-fledged service shop, with the platform we’ve built and services we have—data integrity, business intelligence, back-office administration,” Huppe says. “We’re a nonprofit created by the industry and the industry helped build all the tools we have. If we can leverage them to help the industry, so much the better.”

“We knew data was critical,” he adds. “You’re dealing with trillions of transactions every day. That’s the new universe we’re dealing with now. We’re no longer driven by an $18 CD purchase and less and less by downloads. It’s all about the performance. So when you’re monetizing off every single listen, every hit of the eardrum, data becomes critical.”

SX’s global database of sound recordings—opened to the biz in March—was developed to help address this evolving reality. “The recording industry’s been talking about it for 20 years and it’s kind of an embarrassment that we haven’t done it before now,” he says. “Publishing has the same challenges. We sent a man to the moon five decades ago and we still don’t know who wrote a song or who owns a recording? It’s crazy.”

The organization does fee-for-service work assisting companies and individuals with data cleanup and other tasks, and is also administering direct deals in addition to blanket licenses. Huppe notes that despite a low admin rate (4.6% last year) , SX brings value in the form of tracking money that might otherwise fall through the cracks, reducing overhead and identifying overlapping claims and rights.

A portal, SX Direct, was created for the org’s 130k accounts, tracking the 2,800 services from which it collects every month and more. “When money comes in we split it 50/50 between rights holder and performer,” Huppe points out. “The amount of money is huge. We created SX Direct for our accounts to go in, mine the data, play around with it. Data is important in every part of the value chain.”

"We sent a man to the moon five decades ago and we still don’t know who wrote a song or who owns a recording? It’s crazy.”

There’s still much work to do to streamline and simplify data for the biz, and this is one of Huppe’s primary concerns. Another is a goal that might once have been considered unattainable, but which he believes has become more realistic in recent years: a performance right for terrestrial radio. He’s fond of noting that among industrialized countries, the U.S. is in the sorry company of nations like North Korea and Iran in denying this right to recording rights holders and performers.

“It’s inexcusable that we don’t have that right in this country,” he says. “Nobody makes more money from music than terrestrial radio--$15 billion a year off a crowd they draw with music. The equities are on our side, the momentum is on our side and more people are recognizing the unfairness of this, even the smaller broadcasters. There’s going to be a copyright discussion in the new Congress.”

What might a spin earn should this be achieved? “It’s hard to talk about a rate until you have a right,” Huppe cautions, while adding, “It’s not fair that SiriusXM and Pandora pay and over-the-air doesn’t. We’ll keep the drumbeat alive. We’ll eventually get this right; the only question is what will it be worth by the time we get it.”

Overall, Huppe believes Team SX can serve as “a trusted intermediary” for the biz. “We don’t view ourselves as occupying a particular quadrant of the industry,” he insists. “When you hear us talk it’s about the value of music, it’s for everyone—labels and publishers, indies and majors and all creators. Everybody needs to be paid fairly. It takes everybody along the chain—songwriters, producers, publishers, recording artists, labels—to make the music we enjoy. We’re here to do whatever we can for any part of the industry to make it better. There’s this trusted position we have. There are lower barriers to entry now and there are services we can provide to all sorts of entities of all sizes.”

 

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