SoundExchange -- the record industry body that collects and distributes royalties for the digital use of copyright sound recordings -- passed along $462 million to labels and performers last year. That's 58% higher than 2011 ($292 million).
When Internet radio, satellite radio, or cable television radio in the U.S. plays copyright sound recordings, they pay a royalty for the use of that music. Not only to the songwriters and publishers (as broadcasters do), but also to the recording copyright owners (labels) and performers on the recordings. SoundExchange is the group that administers the latter.
Billboard explains, "The growth of this revenue stream underscores the importance of services such as Pandora -- and other webcasters -- and Sirius XM Satellite Radio in today's digital marketplace. Pandora, which supported the Internet Radio Fairness Act that could have led to a change in webcasters' statutory royalty rates, finished 2012 with 67.1 million active listeners, up 41% from 2011. Sirius XM added 2 million subscribers to finish the year with 23.9 million."
Pandora and SiriusXM pay the lion's share of SoundExchange royalties (some say as much as 90%).
Read more in Billboard here.