Sound Royalties, the company launched by investor Alex Heiche in 2014 with the aim of providing songwriters and creators with advances on future royalties without having to sell copyrights, has billed itself as a business that has the best interests of artists at its core. In February, the company announced a plan to invest $100 million over the following 24 months in such advances, stressing an artist-friendly and flexible approach to its practices that can give musicians options that a bank would not.
Now, it's diving into the complicated issue of royalty payments - more specifically, royalties that have been generated but, for one reason or another, have not been distributed to the songwriters and copyright owners. The company says it has identified $14 million in undistributed royalties owed to over 300 artists and entertainers, including big names such as Mariah Carey, Pharrell Williams, Randy Jackson and Joe Perry, citing internal analysis and research of projected royalty streams from a variety of sources.
Most of the artists that Sound Royalties have identified as having outstanding royalties are not clients of the company, though Heiche tells Billboard that the company first began this research in order to help its customers and expanded its analysis afterward, providing advice on how to collect the payments without charging a fee. Heiche cites a 2015 Berklee College of Music report that claimed that 20 to 50 percent of royalties do not reach their rightful owners as part of the reason Sound Royalties began looking into the issue. (At the time, the RIAA, while allowing that the Berklee report raised an "important subject", did not back that assertion.)
As far as the sources of the uncollected royalties, the company says they come from a variety of different issues, though specific examples were vague. While the music industry's data transparency problem has been much-discussed and contributed to uncollected royalties from streaming services that claim to not have the proper information needed to identify songwriters and copyright owners, Heiche also points towards business disputes and international accounting as sources of undistributed royalties.
"A couple years ago there weren't a ton of writers on every single song; now there might be six," Heiche says. "What if one person says they're entitled to 25 percent and everyone else says 20 percent? The collection society will freeze the payments, and they don't necessarily notify everybody. If we see something is frozen, that's a match for undistributed royalties."
Heiche says that most of the artists and entertainers' royalty streams they have analyzed have approximately $15,000 in undelivered royalties, though the number varies widely, and most of the artists are lesser-known and independent artists.
(Billboard)
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