Songwriters and music publishers are set to receive a net total of nearly $400 million more in royalties for 2021-2022, thanks to a final ruling on streaming royalty rates. This follows a years-long battle between creators and streaming services over fair compensation.
The windfall stems from the Copyright Royalty Board’s Phonorecord III determination in August 2023, which established higher royalty rates for music streamed between 2021 and 2022.
This means streaming giants like Spotify, Amazon Music, YouTube, and Pandora underpaid songwriters and publishers by $419.2 million, according to information from the Mechanical Licensing Collective (MLC), highlighting underpayments during the 2021-2022 period.
The figure includes $281 million in mechanical royalties and $137.8 million in performance royalties. The discrepancy stemmed from final royalty rates being higher than the interim rates used during a four-year dispute between publishers and streamers.
The MLC was established by the Music Modernization Act of 2018. It serves as the sole entity authorized to collect and distribute mechanical royalties due for the reproduction and distribution of musical works. The MLC said it expects the total payout to grow by another $10-$15 million as more reports from streaming services come in.
“We are extremely pleased that songwriters and music publishers finally will receive the over $400 million they are owed in mechanical and performance royalties from the 2021-2022 period.”
NMPA President & CEO David Israelite, said, “We are extremely pleased that songwriters and music publishers finally will receive the over $400 million they are owed in mechanical and performance royalties from the 2021-2022 period.”
“Our appellate win upholding the rate increase we achieved in 2018 will finally net music creators and copyright owners the windfall they should have received years ago. The fact that the majority of this adjustment will be distributed by the MLC in a completely transparent and expedient way is another massive benefit of the Music Modernization Act (MMA) and while we would have preferred it be paid sooner, this is a welcome and critical lift now.”
However, while underpayments dominated the headlines, streaming services were found to have actually overpaid publishers for mechanical royalties during the previous “historical unmatched period” (2018-2020) by about $28.8 million. This reduces the total bonus owed to creators to roughly $390.4 million.
As of Friday (February 23), the MLC said it has received reports of adjustment from 14 of the 21 streaming companies that provided cumulative statements of account to the MLC for unmatched usage from the portion of the Phono III rate period from before the blanket license went into effect (i.e., before 2021).
“Our appellate win upholding the rate increase we achieved in 2018 will finally net music creators and copyright owners the windfall they should have received years ago.”
David Israelite, NMPA
According to the breakdown, Amazon Music overpaid publishers $7.4 million for mechanical royalties, while Apple Music overpaid $17.4 million, YouTube Music overpaid $2.8 million and Spotify overpaid $3.7 million.
The MLC explained that while parts of the final rates are the same as the original rates, other parts are different.
“Due to those differences some DSPs reported adjustments that reduced the amount of historical unmatched royalties previously transferred to The MLC,” it said.
The news arrives amid major developments at the MLC. The organization is currently undergoing its first-ever re-designation process, in which the US Copyright Office conducts a five-year review of its operations and those of the Digital Licensee Coordinator (DLC).
The MLC also recently announced plans to audit streaming services, ensuring the accuracy of reported and paid royalties. In January, it issued notices of intent to conduct audits of streaming platforms that started operating under the compulsory blanket license administered by the MLC starting in 2021.
Music Business Worldwide
