Getting paid for digital downloads from iTunes, Amazon, or other stores is pretty straightforward. The artist or label submits songs for download, perhaps through a distributor like TuneCore or The Orchard. Each time a user buys a download, the store takes its cut, the middlemen take their cut, and the artist gets the remainder.
But there's another potential source of revenue that a lot of artists are missing out on: streaming Internet music. This includes thousands of standalone Internet radio stations, personalized radio services like Pandora and Slacker, and broad-based distributors like MediaNet. Here in the United States, a nonprofit organization called SoundExchange is responsible for collecting the money from these streaming services and distributing it to artists based on the number of times their songs are played. SoundExchange also collects money from satellite radio (Sirius/XM) and cable TV companies (which offer their own dedicated radio stations), and Congress is considering allowing it to collect from traditional over-the-air radio stations as well. (Traditional radio has been historically exempt from paying royalties because copyright owners viewed it as valuable publicity. Now, with other forms of revenue like CD sales declining, they're no longer sure this is a good deal.)
But if SoundExchange can't figure out who owns the copyrights on a particular stream, it can't pay. Writing in Billboard this week, SoundExchange Executive Director John Simson explains that the organization had about $40 million in royalties in 2008 that it couldn't distribute because artists and copyright owners didn't attach enough information to the song. At the very least, Simson pleads, every song should include metadata identifying the group, song name, album name, and label or copyright owner. The group was also holding about $39 million in escrow for artists and copyright owners who simply hadn't registered with SoundExchange yet.
For artists, the lesson is simple: don't be lazy about labeling your work, and be sure to register with SoundExchange. This will become especially important as streaming music services become dominant over the next decade, replacing individual downloads.