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In this economy, it’s hard to imagine anyone making thousands of phone calls trying to give money away. But that’s exactly what is happening as Sound Exchange contacts musicians who have earned, but not yet claimed, digital performance royalties.  And they are building their database fast, by tapping into the cloud of musician profiles available online. How cool is that?

Sound Exchange is a performing rights organization undertaking a massive education campaign about the fact that the rights and revenue exist, and how to go about getting the money.  In the past few months alone, thousands of artists have been contacted.

When sound recordings are streamed on the Internet, played on digital satellite radio, or used on cable music channels, the performers on that recording accrue a small royalty. Those digital performance royalties are collected by SoundExchange, who processes logs from services and distributes the payments to artists. Unlike other royalty societies, who collect and distribute only to their members, SoundExchange collects royalties for all performers, then has to locate and register artists so they can be paid.

If you want to get paid, you have to register with them at Sound Exchange. If you think your music has been played on Sirius-XM Satellite Radio, Internet radio such as Pandora, Yahoo, Live 365.com and AOL, or on digital cable and satellite TV services like Comcast’s “Music Choice” and DirecTV, you can collect.

The data being collected by today’s digital music companies is being knitted together to connect the dots between online listeners and the copyright holders.  By partnering with CD Baby, ReverbNation, SonicBids, Nimbit and others, Sound Exchange is tapping into the long tail of the market, and rewarding musicians who have online profiles – with cash.

CD Baby says they were notified by Sound Exchange that many of their artists were owed money.  They matched their databases and found that thousands of artists had not registered with Sound Exchange and therefore were not receiving their payments. CD Baby then reached out to these members with the good news.

According to iLike founder Ali Partovi, a database matching effort for artists that had uploaded their information onto iLike found more than $8 million for more than 8,000 artists. According to Partovi, the $8 million was just a first-run effort, and a broader initiative involving MySpace Music remains forthcoming. “MySpace has a much larger database, so we’ll be unlocking even more money.”

To stake your claim visit Sound Exchange, or to send an email to info@soundexchange.com

(Friday Feb 6th, 2009) the digital distributor to college campuses Rukus shuttered its doors with this notice: “Unfortunately the Ruckus service will no longer be provided. Thank you,” That means lights out for a number of colleges, universities and students who had signed up for “free” ad supported music.

Ruckus, first hatched in 2003, was acquired by TotalMusic, a collaboration between Universal Music Group and Sony Music Entertainment.

TotalMusic itself (reported on here in 2008) is also now being shuttered, at least according to details shared by Vice President of Product Management Jason Herskowitz in Digital Music News.

“I regret that we didn’t get to show you guys more about what we built – but in these extremely hard economic times it’s hard to blame them for pulling the plug on a still-highly-speculative offering,” Herskowitz offered. “I only hope that someone else figures out how to crack this music-on-the-web nut in a way that is a win for everyone in the value chain,” Herskowitz continued. “The problem is that to make a music service a win for everyone, all of the famished participants have to sit at the table – and be content to let all the others have a little bit to eat, even though they are still hungry themselves.”

It is clear that protected music locked up in a highly controlled service is just simply not what the consumers want anymore, if ever. Continued pursuit of a rights-managed solution that attempts to preserve the status-quo of copyright holders controlling the distribution of music is futile. No more money needs to be wasted on looking backwards.

Instead, lets all come together and help to create systems that embrace frictionless distribution of music and respect the desire of the music consumer to select what they want to listen to. If we make it easy for them to find what they want, more will come. If we make it cheap enough so that the music appears to be free, move will come. If we make it possible for people to spread the word on a new service that suits their needs, more will come. We need to look forward, not backwards and admit that the old game is over and a new game has begun.

I met with Derek Sivers this past weekend (founder of CD-Baby) and asked him what he thought about the recorded music business and the decline in CD sales. He said “well I’m not quite sure what you mean Dave, as sales of indie music at CD Baby have increase at least 30% in 2008 over 2007.” What CD Baby does is provide a way for indie artists to sell their music online in CD form, to sell their music online in digital form and to provide distribution for artists who had none. Many of these artists are thriving now because Derek was willing to think different.

TuneCore is another service that lets artists put their music online for distribution through iTunes, Rhapsody, Amazon, eMusic and other services for a small up-front fee. This is a radical business model that looks forward, not backward, and pushes indies artists ahead on their journey.

New companies such as Lala, iLike, TopSpin, ReverbNation, SonicBids, Nimbit and many, many others are taking radical new approaches to indie artist promotion and distribution that will change the way that the music business functions. Connecting artists directly with their fans in a meaningful way that respects that relationship and lets it thrive is the way of the future.

Artists need to band together to assemble the knowledge and power that is required to propel them into the future. Watch this space for much more on this subject in the coming months. It is time for a revolution in thinking about music commerce and sustainable models for artists and their fans to connect and engage and prosper and interact. This is what the future of music is all about.