ABOUT THE RECORDING INDUSTRY ASSOCIATION OF AMERICA (RIAA)
(from http://www.riaa.com)

MISSION STATEMENT

The Recording Industry Association of America is the trade group that represents the U.S. recording industry. Our mission is to foster a business and legal climate that supports and promotes our members' creative and financial vitality. Our members are the record companies that comprise the most vibrant national music industry in the world. RIAA® members create, manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States.

In support of our mission, we work to protect intellectual property rights worldwide and the First Amendment rights of artists; conduct consumer, industry and technical research; and monitor and review state and federal laws, regulations and policies.

BACKGROUND

Recent laws have granted sound recording copyright owners a long overdue right in public performance. The first of these laws, the Digital Performance Right in Sound Recordings Act of 1995 ("DPRA"), created a right for public performances made by digital transmission. In 1998, the Digital Millenium Copyright Act ("DMCA") amended the DPRA to facilitate licensing for certain services such as webcasters. The RIAA has established the Performance Right Program ("the Soundexchange") to administer the performance right royalties arising from both of these acts, on behalf of the sound recording copyright owners (usually record companies). The Soundexchange involves both licensing and royalty administration and distribution efforts.

The public performance right established by these laws falls primarily into two categories. For interactive, or on-demand services, copyright owners have an "exclusive" right. This means that individual copyright owners are free to license interactive transmissions on the terms they see fit. Non-interactive services may qualify for a "statutory license," a license granted by law provided that the transmission service abides by certain conditions set forth in the law.

In addition to a statutory license for performances, the DMCA clarified the parameters of "ephemeral recordings" – i.e. copies made for the specific purpose of making licensed digital transmissions, including creating a statutory license for multiple ephemeral recordings.

ROYALTY ADMINISTRATION

Digital audio services (such as webcasters) eligible for a statutory license pay royalties based on a negotiated or arbitrated rate. The Soundexchange negotiates and issues licenses pursuant to the terms of the statutory licenses on behalf of the Soundexchange members. If negotiations are unsuccessful, the Soundexchange represents the members in a Copyright Office arbitration proceeding.

Once the royalty rate is established, the Soundexchange collects, administers and distributes the royalties to entitled sound recording copyright owners. Of the royalties allocated to the record companies, the law prescribes that a portion be given to the recording artists. Specifically, half of the royalties collected under a statutory license must be allocated to artists as follows:

• 45% to the featured artists;
• 2.5% to non-featured musicians [through a trust fund jointly administered by the record companies and the American Federation of Musicians ("AFM")]; and
• 2.5% to non-featured vocalists [through a trust fund jointly administered by the record companies and the American Federation of Television and Radio Artists ("AFTRA")].

All performance royalty calculations and distributions are based on actual performance data provided to the Soundexchange by subscription service providers, webcasters, and other licensees.

THE ROLE OF RIAA

Members of the Soundexchange include major and independent record companies alike, from Sony and Warner to independents Koch International, Alligator Records, Zomba, and Blacktop Records. The Copyright Office recognized the benefits of collective administration of these royalties, and so has named the Soundexchange as the sole administrative entity for subscription services' royalties.

Members of the Soundexchange include major and independent record companies alike. The Soundexchange is clearly not only a project of the majors. This is evidenced by the RIAA’s membership roster for the Program, which includes such well known independents as Koch International, Alligator Records, Zomba and Blacktop Records. These companies understand the economic efficiencies and benefits of sharing the costs associated with administering royalties.

The Soundexchange involves both licensing and royalty administration and distributions. The Soundexchange can negotiate and issue licenses pursuant to the terms of the statutory licenses. The Soundexchange is currently negotiating with and issuing licenses to webcasters that wish to obtain a statutory license. This licensing function is guaranteed to be an on-going effort, especially since the statutory license requires new rates and terms to be set every two years.

Once rates and terms are set, the Soundexchange collects, administers and distributes the performance right royalties due from statutory licensees. The Soundexchange is prepared to handle the following:

• contact the digital transmitters regarding the use of music;
• collect performance royalties from the statutory licensees;
• collect and process all data associated with the performance of the works;
• allocate royalties for the performance of the work based on all of the data collected and processed;
• pay out the non-featured artists share of the royalties to AFM and AFTRA;
• provide detailed reports summarizing the titles, featured artists and royalty amounts for each of the works performed by the statutory licensees; and
• make annual distributions of performance rights royalties, once the terms have been negotiated.