What Is the SoundExchange Letter of Direction?

A SoundExchange Featured Artist Letter of Direction (LOD) is a document by which a Featured Artist directs SoundExchange to pay a portion of the Featured Artist’s sound recording performance royalties to a participant involved in the creative process – producers, engineers, mixers, re-mixers, etc. (Creative Participants).

What Are Featured Artists?

The term “Featured Artist” refers to the individual(s) or group(s) most prominently featured on a track or album. Non-featured Artists, such as session musicians or backup singers, do not receive royalties directly from SoundExchange. SoundExchange will honor an LOD for Creative Participants who are not the featured artist on the sound recording or studio musicians or background singers

How to Use and How Not to Use LODs?

LODs are not used for one Featured Artist to pay another Featured Artist for a sound recording on which they collaborated (if a recording is released as “Artist A Ft. Artist B,” Artist A would not execute an LOD to pay Artist B). Rather, it would be treated as a collaboration and the royalties would be allocated 50/50 between Artist A and Artist B (unless Artist A and Artist B inform SoundExchange of an alternative allocation).

An LOD can only be used by Featured Artists to direct payments to Creative Participants. LODs cannot be used to direct payments to other third parties, including record labels, lenders, royalty advance companies, or any person or entity not directly involved in the creative process.

As an example, assume Sound Recording X is performed by “Artist A featuring Artist B.” SoundExchange would treat Sound Recording X as a collaboration and allocate the Featured Artist royalties 50/50 between Artist A and Artist B (unless Artist A and Artist B inform SoundExchange of an alternative allocation). If the Creative Participant is seeking to receive payment on all royalties allocated to Artist A and Artist B for Sound Recording X, the Creative Participant would need to obtain LODs from both Artist A and Artist B. If, on the other hand, the Creative Participant is only seeking payment from Artist A but not Artist B, then the Creative Participant would only need to procure an LOD from Artist A

What Documents Does SoundExchange Need?

SoundExchange requires the following completed documents: (1) a completed and signed SoundExchange LOD Form; (2) a completed LOD repertoire chart of recordings covered; and (3) the Docusign certificate of completion, or equivalent document, if the signature on behalf of the performer or authorized LOD signatory is presented electronically.

The SoundExchange LOD Form must include: the (1) name of the solo artist or group on the recording(s) (“Featured Artist”); (2) performer(s) legal name(s); (3) effective date for the LOD (use Repertoire Chart if multiple effective dates); (4) performer(s) signature(s) and signature date(s), or authorized signatory; (5) performer(s) printed name; (6) name of the producer, mixer, or engineer (“Payee”); and (7) Payee Address, Telephone Number and E-Mail. 

The LOD repertoire will include: (1) Solo Artist or Group Name; (2) Sound Recording Track Name; (3) Effective Date; (4) ISRC (if available) for each recording; and (5) Payment Percentage (“Percentage”) for each recording (as a percentage of the Featured Artists’ share). 

How Should I Submit My Forms?

Completed and executed LODs and Repertoire Charts should be submitted to SoundExchange via email at accounts@soundexchange.com or through your SoundExchange Direct account at https://sxdirect.soundexchange.com. You may also submit copy forms via fax or postal mail to SoundExchange

Does LOD Direct SoundExchange to Pay Royalties?

An LOD directs SoundExchange to pay a portion of a Featured Artist’s royalties for one or more sound recordings to a specific Creative Participant. An LOD can include multiple sound recordings (or albums) by the same Featured Artist, but cannot include multiple sound recordings by multiple Featured Artists. The LOD will apply to a given sound recording regardless of the album it appears on. If a specific sound recording appears on multiple releases, the LOD will be applied to all instances of the specific sound recording on all releases.

How Will I Know If the LOD Has Been Processed?

You will receive a notification of confirmation when SoundExchange receives your LOD application. The authorized contacts of the Featured Artist, the Creative Participant, and the person who submitted the LOD will receive notifications when the LOD is processed and becomes active.

An LOD takes a minimum of two weeks to process, assuming the application is complete and valid.

EPGD Business Law is located in beautiful Coral Gables. Call us at (786) 837-6787, or contact us through the website to schedule a consultation.

*Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns. Contacting us through our website does not establish an attorney-client relationship.*

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Silvino Diaz

Silvino E. Diaz’s practice ranges from Civil and Commercial Litigation to Entertainment and Intellectual Property Law. Silvino has earned a reputation as one of Puerto Rico’s foremost advocates for independent musicians and artists. As a result of his sustained commitment to creative industries, he was named Professor of Intellectual Property Law at Atlantic University College (Guaynabo, PR) – the Caribbean’s leading digital arts institution – where he spearheaded the “Introduction to IP” course for both the graduate and undergraduate programs, and was appointed by the Office of the President to develop an Intellectual Property graduate curriculum, where he served until moving to Miami in 2017. He is the founder of the service known as Starving Artists, where he offers innovative business and legal counsel for artists and creatives.


*The following comments are not intended to be treated as legal advice. The answer to your question is limited to the basic facts presented. Additional details may heavily alter our assessment and change the answer provided. For a more thorough review of your question please contact our office for a consultation.

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