Most people agree that Spotify should pay songwriters more. But where’s this money going to come from?

Late yesterday (October 14), the National Music Publishers’ Association made the claim that a number of digital service owners – including Spotify, Apple, Amazon, and Google – are trying to cut the amount of money they pay songwriters in the US to the “lowest royalty rates in history”.

That claim was made by David Israelite, CEO and President of the NMPA, in reference to a new rate-setting procedure in the States presided over by the Copyright Royalty Board (‘CRB IV’) that has just got underway.

CRB IV will result in a new statutory streaming royalty rate paid to songwriters between the years of 2023 and 2027.

Each digital service provider must now file a proposal for what they think songwriters should get paid from their platforms during this period.

These filings aren’t yet public, but Israelite claims he knows what’s in them – and it’s not good news.

The NMPA also has to file a proposal for what the new royalty rates should be: it’s looking to raise the current rate up to 20% of a streaming service’s annual revenues.

That would be a hike from the 15.1% rate the NMPA secured in the previous CRB process – CRB III. (Even this 15.1% rate, though, is now being appealed by the likes of Spotify, Amazon and Google.)

You’ll struggle to find anyone in the music industry, of course, who doesn’t think that songwriters deserve to be paid more money from streaming services than the often paltry amount even the biggest hitmakers collect today.

To the songwriting community, Israelite’s claim that the likes of Spotify are now trying to pull this royalty rate down even further feels like a monumental kick in the teeth. The anger is building out there.

Take for example, this quote, sent to MBW last night by Lucas Keller, CEO of Milk & Honey – one of the world’s pre-eminent songwriter and producer management companies.

“This is the most disgraceful move that Big Tech could make against the creators. It’s happening in our front yard, and we see you — pride goeth before a great fall.

“This is a call to our community as well — when will a prominent artist have the courage to speak up on behalf of their songwriter friends? When will the heads of the publishers say something as they hide in the shadows for fear of ridicule by their bosses that own the record labels? When will the major record companies admit that they are partially to blame?

“The songwriters are coming down them hills for you, and their art will not be marginalized for much longer.”

“This is the most disgraceful move that Big Tech could make against the creators. It’s happening in our front yard, and we see you — pride goeth before a great fall.”

Lucas Keller, Milk & Honey, responding to news that Spotify, Google and others are proposing to cut songwriter royalty rates in the US

Keller touches on an important point: We don’t yet know what’s in the proposal filings of ‘Big Tech’, but you can bet they’re going to make one argument very strongly – that digital services already pay out billions to music rightsholders… and that it’s not the fault of Spotify, Google et al that the lion’s share of this money is taken by record companies and artists, while only a smaller proportion goes to songwriters and publishers.

In David Israelite’s view, the blame for songwriters not getting paid enough doesn’t rest with the record companies; instead, he says, the tech giants can “clearly afford” to pay the entire music business – songwriters especially – substantially more money.

In this exclusive MBW Podcast interview, Israelite sets out his argument, explaining why the NMPA is now demanding that songwriters in the US effectively get 20% of revenue generated by any streaming service.

He also tackles the counter-arguments of Big Tech over a songwriter pay rise head on – and doesn’t mince his words.

MBW asks Israelite what he thinks to the argument that digital music services are either unprofitable or close-to-unprofitable, and therefore don’t have the margin to pay out more to music rightsholders.

He replies: “Well, this is a podcast, so you can’t really see me laughing – but that [idea] is preposterous.”

He adds: “It’s just ridiculous, we are talking about some of the largest and most wealthy corporations in the history of the planet. And one of the things that I think will come out at the [CRB IV] trial [is that] it’s not just about the profitability of the music store. It’s about the value of the songs to these companies at large. So if an Amazon is claiming that Amazon Music doesn’t have the margin, the first question is, well, what other benefits does Amazon get from having a store? And the same for Apple, and the same for Google.

“The idea that these digital services can’t afford to pay songwriters more is just ridiculous. we are talking about some of the largest and most wealthy corporations in the history of the planet.”

David Israelite, NMPA, speaking on the new MBW Podcast (play above)

“I completely reject the idea that they can’t afford [higher] rates. If you look at the types of things that these music stores do, what’s more important than paying for the songs? The songs are the fundamental, most inherently valuable thing that is offered within these stores.

“Without the songs there would be no recordings – and there would be no music store. The idea that somehow, the songs should take less than the digital company that delivers the songs is preposterous.”

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