The Sound Recording Division became operational in 2000 when the AFM and AFTRA (now SAG-AFTRA) determined that neither union had the staffing and resources to distribute statutory royalties to non-featured performers pursuant to U.S. Copyright legislation and foreign equitable remuneration ("foreign royalties") due their members. Participants due royalties do not have to be members of those unions in order to receive payments from U.S. sources and certain foreign territories. However, royalties from many other foreign collectives do require that the Fund only distributes money to AFM and/or SAG-AFTRA members.
Sound Recording revenue includes Private Copy royalties generated from the U.S. Audio Home Recording Act (AHRA); and reciprocal Private Copy agreements with numerous foreign collectives in countries that also have legislation providing these royalties such as: Japan, the Netherlands, Hungary, Spain, Portugal, Greece, Germany, Latvia, and Estonia, just to name a few. The Fund also collects record rental remuneration from Japan, where sound recordings are rented in much the same manner DVDs are rented in the U.S. The largest share of royalties, however, is generated from the Digital Performance Royalty Act (DPRA) and the Digital Millennium Copyright Act (DMCA) which the Fund collects from Sound Exchange on behalf of non-featured performers. These include royalties collected from digital subscription services, webcasting, and other digital services.
Due to the complex nature of the distributions and the vast number of sound recordings and performers involved, the Fund does NOT pay on each and every sound recording performed or released. Rather, payments are based on a census or a survey (see the Fund’s Distribution Guidelines for a detailed description of how this works). For Private Copy royalties the Fund uses, in the U.S., sales data from SoundScan to determine each sound recording's ranking and pro-rata share of the royalty pool, and data from the respective foreign collectives for such determinations. For Digital Performance Royalties the Fund relies on performance data (such as play lists, and similar material) supplied by Sound Exchange to make these determinations.