Each year, we write about SoundExchange issuing notices of their intent to audit various digital music services to review their royalty reporting and payment. This year is no different, with Federal Register notices recently being issued to audit certain companies in various services, including satellite radio, webcasters, broadcasters who stream, and business establishment services. We wrote more generally about the music royalty audits here. Be prepared, as you never know which services SoundExchange will choose to audit, and when they do, they can look at your records for the last three year.
While notices of these audits are public, the results are not. So all we know is that a number of services will have to deal with SoundExchange’s auditors, who under CRB rules must be Certified Public Accountants. If the audit does not find any major issues, SoundExchange pays for the auditor’s costs. If there is a discrepancy where the service has underpaid by 10% or more, the service pays. So be prepared!