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News October 25, 2021

Spotify, Amazon, and Pandora propose even lower streaming royalty rates

Spotify, Amazon, and Pandora propose even lower streaming royalty rates

Three of the biggest streaming platforms in the world, Spotify, Amazon, and Pandora, want to significantly reduce royalty rates. 

As reported by Billboard, the major streamers filed to the U.S. Copyright Royalty Board (CRB) proposing royalty rates for the period 2023-2027. They’re recommending a significant reduction in royalty rates over the period 2018-2022.

The upcoming four years are known as CRB Phonorecords IV, denoting the fourth period of rate determination. It follows Phonorecords I for 2008–2012, Phonorecords II from 2013–2017, and Phonorecords III from 2018-2022.

There was an increase in Phonorecords III, culminating in a royalty rate of 15.1% of a service’s revenue in the final year. Yet that number is currently being debated in an Appeals Court, and Spotify even returned to the lower Phonorecords II rates as soon as the case went to appeal.

The battle comes for the upcoming Phonoerecords IV term: the National Music Publishers’ Association (NMPA) want an increase to 20% of a digital service’s revenue, but the likes of Spotify, Amazon, and Pandora want to reduce it to closer to 10.5%.

Apple Music is currently the only exception, with Apple following the lead of the judge in the Phonorecords III appeal, using a simplified version of whatever rate formula is decided in that case. That could potentially mean Apple represent a better deal for songwriters in the period 2023-2027.

The Digital Media Association (DiMA) defended the lower rates, stating that streamers were seeing “billions of dollars invested into catalogs.” They used a trickle down economics argument, saying that an expanded listener base would ultimately lead to more revenue.

The news will come as a blow to the Union of Musicians and Allied Workers, who have spent this year asking for an increase to a flat 1% stream. They organised worldwide protests outside of Spotify’s offices recently, which prompted a House Judiciary Committee to consider whether Spotify’s Discovery Mode illegally lowered royalty rates.

For more on this topic, follow The Industry Observer.

This article originally appeared on The Industry Observer, which is now part of The Music Network.


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