It’s official: The Copyright Royalty Board (CRB) has accepted a (near) music industry-wide settlement that will improve songwriters’ streaming royalty rates in the United States from January 1, 2023.
The settlement – known as ‘Phonorecords IV’ or ‘CRB IV’ – will see songwriters and music publishers paid a headline rate of 15.35% of a given interactive streaming service’s US revenue by 2027.
That rate will be ‘phased in’, because ‘Phonorecords IV’ covers the five-year period between 2023 and 2027:
- In 2023 (starting January 1), songwriters and music publishers will be paid a headline rate of 15.1% of a US service’s revenue;
- in 2024, this will increase to 15.2%;
- in 2025, it will increase to 15.25%;
- in 2026 it will increase to 15.3%;
- and in 2027 it will reach 15.35%.
On Friday (December 30), the CRB published its ‘Final Rule’ Determination of the Rate Structure for Phonorecords IV – which means these new rates will be effective in the US in time for Sunday (January 1, 2023).
Alternative to the headline rates under CRB IV, music publishers may be paid via a ‘Total Content Costs’ calculation. This ensures that song rightsholders (publishers, songwriters) are paid a certain minimum figure in relation to what each service pays recorded music rightsholders in a year for their rights.
For example, for ‘Standalone Portable Subscription Offerings’ (i.e. typical interactive music streaming subscriptions to Spotify, Apple Music et al) US music publishers will from 2023 onwards – thanks to CRB IV – be paid the lesser of (1) 26.2% of ‘Total Content Costs’ across all music rights or (ii) an aggregate amount of $1.10 per subscriber for the relevant period.
This formula will then provide an ‘all in’ royalty rate, from which ‘applicable’ performance royalties will be subtracted to leave streaming services with a calculation that determines their mechanical royalty payout to publishers.
(You can read the finer detail of the CRB’s full ‘Final Rule’ of the new rates, published today, through here.)
The ‘CRB IV’ settlement was initially proposed by a conglomeration of music industry bodies in August.
These bodies included the National Music Publishers’ Association (NMPA, representing music publishers) as well as the Digital Media Association (DiMA, representing services including Spotify and Amazon Music).
Speaking following the CRB’s announcement today (December 30), David Israelite, CEO and President of the NMPA, said: “Starting January 1, songwriters will enjoy the highest rates in the world and the highest rates in the history of digital streaming.
“Thanks to the many songwriter advocates who worked hard to make this happen. There are still many challenges ahead to ensure that songs receive their proper value, but the future is bright.”Music Business Worldwide