Neighboring Rights & The Terrestrial radio Gap

Sound Recording Performance Rights

While performance royalties for compositions are paid globally, performance royalties for Sound Recordings (Masters) are called Neighboring Rights internationally because they "neighbor" the author's copyright.

The United States AM/FM Radio Gap Unlike almost every other developed nation, the United States does not recognize a public performance right for sound recordings on analog terrestrial broadcast media. Under 17 U.S.C. § 114, terrestrial AM/FM radio stations pay zero performance royalties to recording artists or record labels; they only pay performance royalties to songwriters and music publishers.

The Digital Solution: SoundExchange In 1995, Congress passed the Digital Performance Right in Sound Recordings Act, creating a digital public performance right. Under 17 U.S.C. § 114(d)(1), digital, non-interactive services (satellite radio like SiriusXM, digital cable TV, webcasters like Pandora) must pay sound recording performance royalties. These are collected and distributed by SoundExchange.

SoundExchange Payout Structure SoundExchange distributions are set by a statutory split: - 50% to the Sound Recording copyright owner (the record label). - 45% directly to the Featured Artist. - 5% to a non-featured artist royalty fund (session musicians and backing vocalists, administered by SAG-AFTRA & AFM).