The National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI), and the trade org for digital music services in the US (DiMA), agreed to a settlement for higher mechanical streaming royalty rates in the U.S. ahead of Copyright Royalty Board proceedings known as ‘Phonorecords IV’.
These proceedings, for the years 2023-2027, are set to get underway later this year.
It follows a previous legal battle between publishers and streaming services in the US known as ‘Phonorecords III’, for the five years between 2018 and 2022, in which the CRB decided to increase songwriter/publisher royalty rates for streaming and other mechanical uses from 10.5% to 15.1% .
Spotify and various other music streaming platforms appealed that ruling, but last month, the CRB officially secured that 15.1% rate for publishers and songwriters.
Per the new agreement, for the years 2023-2027, the headline royalty rate will be set at 15.35%, which, according to a press release issued by the NMPA, NSAI and DIMA yesterday, will be phased in over the five-year term.
The press release added: “The deal also includes a number of changes to other components of the rate, including increases to the per-subscriber minimums and the Total Content Costs (TCC), i.e. calculations which reflect the rates that services pay to record labels.”
That 15.35% rate is slightly higher than the current 15.1% rate, but lower than the 20% proposed by the NMPA last year.
According to a joint announcement issued by music publishers and digital services yesterday, “[This 15.35%] agreement will provide higher royalty rates for songwriters and music publishers, promote sustainability, innovation, and continued investment for the entire industry, and usher in a new era of collaboration between all parties.”
As noted in our report yesterday, this proposal could still be rejected by the CRB if notable opposition to its suggestions arises, but all involved parties in the proposal are hopeful that the CRB will give it the green light.
Music publishers have reacted positively to the news. Here’s what some of them had to say:
In a statement published on Twitter, Sony Music Publishing Chairman and CEO, Jon Platt, said: “Today marks a significant achievement for the songwriting community. A settlement has been reached in the U.S. Copyright Royalty Board (CRB) Phonorecords IV proceedings which will increase the rates paid by audio only streaming services to music publishers and songwriters in the US over the next five-year term beginning in 2023
“The settlement is an important win for songwriters and composers, reflecting years of effort and hard-fought litigation. It also brings greater certainty over the next five years because unlike a trial, there is no chance of an appeal.”
Jon Platt, Sony Music Publishing
“With this settlement, the headline rates will increase from 15.1% to 15.35% over the next five years, while also improving the alternate rate structures by raising the per subscriber minimum, enacting better terms for bundle offerings and increasing the total content cost which guarantees a percentage of what record labels are paid
“The settlement is an important win for songwriters and composers, reflecting years of effort and hard-fought litigation. It also brings greater certainty over the next five years because unlike a trial, there is no chance of an appeal.
“Congratulations to all the incredible songwriter advocacy groups who made this achievement possible, including the NSAI, SONA the 100 Percenters and BMAC.
“While there is more to be done in the fight for better songwriter pay and recognition, today marks an important industry milestone. I look forward to working together as we continue to elevate the value of songwriters across the business. Above all – I want to thank you, SMP’s sunrise and composers. Thank you for your partnership and collaboration.”
Jody Gerson, Universal Music Publishing Group, Chairman and CEO, said: “We welcome today’s announcement that will see increased mechanical royalty rates of 15.35% paid to songwriters in the United States from 2023 to 2027.
“This is the result of a long collaborative effort by the NMPA, NSAI, members of our team and from across the wider songwriting community in the U.S. to ensure recognition and fair pay for our writers.”
Jody Gerson, Universal Music Publishing Group
“This is the result of a long collaborative effort by the NMPA, NSAI, members of our team and from across the wider songwriting community in the U.S. to ensure recognition and fair pay for our writers.
“Having worked together collectively as an industry to secure a fixed increase in the Phonorecords III case last month, we are grateful for our newly strengthened partnerships with the DSP’s, which will help recognize the value that songwriters bring to the world, both now and into the future.”
In a message posted to social media, Warner Chappell Music told its songwriters: “You joined us in this fight, and we wouldn’t be here if it wasn’t for you. While there will always be more work to be done to ensure you’re paid what you deserve, we’re optimistic about the future.
“Today, after months of negotiations, the NMPA and NSAI on behalf of all songwriters and publishers reached a settlement with streaming services to set the highest royalty rate in the history of streaming anywhere in the world.
“While there is still more work to be done, this is an important and historic moment in the ongoing fight for fair songwriter compensation.”
Warner Chappell Music
“The settlement will also improve the alternate rate structure by raising per-subscriber minimums providing better terms for bundles of music products with other offerings and increasing what song rights are paid as a percentage of total content cost (TCC) i.e. what record labels are paid.
“While there is still more work to be done, this is an important and historic moment in the ongoing fight for fair songwriter compensation.”
Merck Mercuriadis, founder and CEO of Hipgnosis Songs, said: “I would like to congratulate David and Bart and their teams at the NMPA and the NSAI respectively.
“Hipgnosis has been fighting and advocating for songwriters for every day of its existence. It’s the reason I started the company.
“Songwriters winning the CRB III appeal was an incredibly important step but it was an imperfect positive. What’s been achieved with this CRB IV result improves that dramatically and gives Songwriters stability for the next 5 years without arguments or fear of appeal at the highest rates ever paid in the streaming era. For that the streaming services, DIMA and Garrett Levin should also be applauded.
“This is another important step towards finally recognizing that the Songwriter and the Song are the most important components in the music industry.”
Merck Mercuriadis, Hipgnosis Songs
Added Mercuriadis: “This is another important step towards finally recognizing that the Songwriter and the Song are the most important components in the music industry.
“I’ve always believed that to get Songwriters where they really deserve to be in the economic equation we would have to step out of legislation and have proper free market negotiations with the recorded music companies and streaming services. They are best placed to recognize and reward the incredible contributions of Songwriters as without them their businesses would not exist.
“The background of stability for the next 5 years provided by what’s been achieved with CRB IV will allow us to ensure that going forward no discussion will ever take place again that determines how a Songwriter is paid without Songwriters at the table expressing the consensus views and demands of the Songwriting community alongside the NMPA, NSAI, DIMA, Spotify, Apple, Universal, Sony, Warner, BMG et al.”
In statement published on social media, Kobalt Music said: “From day one, we’ve stood for transparency and fair compensation for songwriters, and embraced the digital transformation of the music industry.
“Today’s settlement is a historic day for songwriters, securing the highest steaming rate in the world, and a victory for all.”
Kobalt
“Today’s settlement is a historic day for songwriters, securing the highest steaming rate in the world, and a victory for all.”Music Business Worldwide
