Royalty rates paid to songwriters in the US from on-demand subscription streaming will rise by 44% over the next five years following a landmark ruling in the market.
Earlier today (Jan 27) the Copyright Royalty Board (CRB) confirmed its decision concerning the compulsory mechanical rates which will be distributed to writers for 2018 – 2022.
This decision is the result of a trial that took place between March and June of 2017 with the National Music Publishers Association and the Nashville Songwriters Association (NSAI). The likes of Google, Spotify, Apple and Amazon lobbied for the tech community.
The ruling includes a significant increase in the overall percentage of revenue paid to songwriters from 10.5% to 15.1% over the next five years – the largest rate increase in CRB history.
In practical terms, that would mean a near-44% jump in royalties – for example, from $5,000 to $7,200.
Additionally, the CRB removed the Total Content Cost (TCC) cap, which the NMPA says will ‘give publishers the benefit of a true percentage of what labels are able to negotiate in the free market resulting in significantly higher royalties for songwriters’.
The CRB also increased the TCC rate resulting in the most balance between record label and publishing rates in the history of US mechanical licensing.
In addition, the CRB granted a late fee which will dramatically alter the licensing practices of digital music companies.
“Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.”
David Israelite, NMPA (pictured)
NMPA President & CEO David Israelite: “We are thrilled the CRB raised rates for songwriters by 43.8% – the biggest rate increase granted in CRB history.
“Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.
“While an effective ratio of 3.82 to 1 is still not a fair split that we might achieve in a free market, it is the best songwriters have ever had under the compulsory license.
“The court also decided in our favor regarding a late free which will force digital music services to pay songwriters faster or be subject to a significant penalty. The bottom line is this is the best mechanical rate scenario for songwriters in U.S. history which is critically important as interactive streaming continues to dominate the market.
“The decision represents two years of advocacy regarding how unfairly songwriters are treated under current law and how crucial their contributions are to streaming services.
“We thank the songwriters who shared their stories with the court and helped illustrate how badly these rate increases are needed. While the court did not grant songwriters a per-stream rate, the increases in overall rates and favorable terms are a huge win for music creators.”
Nashville Songwriters Association International (NSAI) Executive Director Bart Herbison: “Songwriters desperately need and deserve the rate increases resulting from the Copyright Royalty Board (CRB) trial.
“The CRB was a long and difficult process but songwriters and music publishers together presented a powerful case for higher streaming royalty rates. The Nashville Songwriters Association International (NSAI) thanks our songwriter witnesses Steve Bogard, Lee Thomas Miller and Liz Rose whose testimony was compelling.”Music Business Worldwide