Tuesday Oct 19, 2021

Spotify and other streaming services propose ‘lowest royalty rates in history’ for songwriters

Spotify and other streaming services propose ‘lowest royalty rates in history’ for songwriters

Spotify and other streaming services propose ‘lowest royalty rates in history’ for songwriters

Information about Spotify and other streaming services propose ‘lowest royalty rates in history’ for songwriters

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You might want to sit down for this one, songwriters.

Music streaming service owners including Spotify, Apple, Amazon, Pandora and Google have all filed documents with the US Copyright Royalty Board (CRB) this week to tell them what they think they should pay songwriters for the five years between 2023 and 2027.

The Copyright Act requires the Copyright Royalty Judges to conduct proceedings every five years to determine the mechanical royalty rates paid by streaming services to songwriters and publishers.

The current proceedings, for the Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV), also referred to as CRB IV, aim to set songwriter streaming royalties for 2023-2027.

David Israelite, President & CEO of the National Music Publishers Association (NMPA), has previously called CRB IV “the most important CRB trial we’ve ever had”.

Speaking to MBW ahead of the filings this week, Israelite explained that the trial “has momentous consequences for songwriters and music publishers”.

He added: “We will be fighting to raise significantly what streaming services pay songwriters, and we will now see with full transparency to what degree Spotify, Amazon, Apple, YouTube and Pandora are trying to cut what little they currently pay.

“Songwriters should all take note of what these giant technology companies propose – their proposals prove how much, or how little, they truly value the creators they rely on.”

The filings, and their contents, haven’t been made public yet, but Israelite tells us today (October 14) that “Amazon, Spotify, Apple, Pandora and Google have proposed the lowest royalty rates in history”.

David Israelite, NMPA

“It is disappointing, but not surprising, given how they have treated songwriters over the years, including their continued assault on the rate victory that was achieved in 2018 which they are still appealing four years later.”

David Israelite, NMPA

He added: “Not only do they propose rolling back rates and terms to erase all gains over the last 15 years, but they actually are proposing a structure worse than at any point in the history of interactive streaming.

“It is disappointing, but not surprising, given how they have treated songwriters over the years, including their continued assault on the rate victory that was achieved in 2018 which they are still appealing four years later.

“The next time you see a billboard, paid ad, or token gesture from a streaming service claiming to value songwriters, remember that their actions speak louder than any hollow gestures. This fight has just begun.

MBW understands that the NMPA, on behalf of music publishers and their songwriters have proposed a greater formula of four parts, including:

  • 20% percentage of revenue; or
  • 40% of what record labels and artists receive; or
  • $1.50 per subscriber; or
  • $0.0015 per play

Today’s news lands against backdrop of the ongoing CRB III legal battle between songwriters, their publishers and certain music streaming services in the US.

To recap, in January 2018, songwriters in the US enjoyed a major victory when the US Copyright Royalty Board (CRB) ruled that royalty rates for streaming and other mechanical uses would rise to 44% in the market in the five years between 2018 and 2022.

The ruling included a significant increase in the overall percentage of revenue paid to songwriters from 10.5% to 15.1% in the five years between 2018 and 2022, which would mark the largest rate increase in the history of the CRB.

That decision was ratified in February 2019, when the CRB published the final rates and terms for songwriters.

The following month (March 2019,) the likes of Spotify, GoogleAmazon and Pandora (but not Apple) opposed the ruling, in what the NMPA equated to “suing songwriters”.

Spotify’s decision was criticised by prominent music industry figures and superstar songwriters, while advocacy group Songwriters of North America (SONA), co-founded by songwriters Kay Hanley, Michelle Lewis and lawyer Dina LaPolt, immediately condemned the move.

“There are many fronts to the war for higher and fairer rates, but we hope that the entire music industry will unite in supporting our efforts in these pivotal cases as they will dictate the future of the streaming economy.”

David Israelite, NMPA

Speaking to MBW ahead of the rate setting filings for CRB IV this week, NMPA President & CEO David Israelite said: “It is extremely disappointing that we will be fighting for higher rates in this trial, while also simultaneously beating back the appeal of the last raise we won for music creators in CRB III, which is currently being waged by some of the biggest companies in the world.

“There are many fronts to the war for higher and fairer rates, but we hope that the entire music industry will unite in supporting our efforts in these pivotal cases as they will dictate the future of the streaming economy.”Music Business Worldwide

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