These are royalties owed to the artists who performed on a song (or spoken word or comedy album) and the owner of the sound recording any time that track is played via non-interactive streaming (meaning someone did NOT click to hear a specific song) on services such as Pandora, Sirius XM, and cable TV radio stations.
These “non-interactive” royalties are divided as follows:
Sound Recording Share (also known as Label Share): 50% - This amount is paid to the label, rights owner or royalty administrator.
Featured Artist: 45% - This amount is paid directly to the main performing artists.
Non-Featured Artist: 5% - This amount is paid to the backing musicians.
It’s important to note that Digital Performance Royalties for sound recordings aren’t related to publishing rights, so no portion of this royalty is owed to publishers or songwriters. With this type of royalty, it’s all about the recording, not the underlying song/composition. Performing Rights Organizations such as ASCAP and BMI do NOT collect Digital Performance Royalties for sound recordings. Instead, they’re collected by SoundExchange, which holds the funds until the appropriate parties register with them to claim the money.
**Interactive streaming sites such as Spotify and Apple Music do not pay out to Sound Exchange. Interactive serviceses negotiates their rates directly with labels or their distributors and pays them directly.