Victory for US songwriters as Copyright Board increases royalty payments from streaming services by 44%

In a landmark decision, the US Copyright Royalty Board (CRB) of the US Library of Congress has hiked rates in a new five-year deal from 10.5% to 15.1% of their revenues from streaming services as Spotify, Apple Music and Amazon.

The National Music Publishers’ Association (NMPA) estimates this will result in a 44% rise in revenues for US songwriters and publishers.

The revenue is split between mechanical and performance royalties.

Songwriters won’t have the hassle of working out what they have to be paid. They can opt for a percentage of revenue or the total content costs.

Between last March and June, the CRB heard testimony from the NMPA and the Nashville Songwriters Association (NSAI) and some of their members of how unfair the old rate was.

The songwriters and publishers pushed for payment per stream.

“Songwriters desperately need and deserve the rate increases,” said Bart Herbison, NSA’s Executive Director.

Google, Spotify, Apple and Amazon also put their side of the argument.

Apple broke from the ranks and also pushed for a ‘by stream’ rate calling the old rate structure was “too complex”.

Although not receiving a payment-per-stream ruling was disappointing. the NMPA’s President/CEO David Israelite suggested it was the best the songwriters could get.

“The increases in overall rates and favourable terms are a huge win for music creators,” he said.

“We are thrilled the CRB raised rates for songwriters by 43.8% – the biggest rate increase granted in CRB history.

“Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market.

“The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favourable balance in the history of the industry.

“While an effective ratio of 3.82 to 1 is still not a fair split that we might achieve in a free market, It is the best songwriters have ever had under the compulsory licence.

“The bottom line is this is the best mechanical rate scenario for songwriters in US history, which is critically important as interactive streaming continues to dominate the market.

“The decision represents two years of advocacy regarding how unfairly songwriters are treated under current law and how crucial their contributions are to streaming services.”

Martin Bandier, Chairman/CEO of Sony/ATV Music Publishing, also lamented the lack of a per-stream rate.

But he added, “The planned rate increases go a long way to fairly compensate our songwriters for the essential contribution they make to streaming’s success story.”

He described the CRB ruling as “a very positive” one, “as it will deliver an unprecedented topline rate increase for songwriters and publishers over the next five years.”

The CRB also removed the Total Content Cost (TCC) cap and raised the TCC rate, which should help close the gap between record company and publishing earnings.

Another win for songwriters and publishers is that streaming services also now face late fee of about 18% if they delay payments.

The Association Of Independent Music Publishers agreed that these last two “are sorely needed elements in our path towards equitable compensation for the use of our music in the ever-growing digital economy.”

The NMPA estimates that recording labels will still be receiving $3.82 for every $1 paid to songwriters and publishers.

None of the streaming services have responded to the new rates.

Analysts reckon that these might not affect the services owned by deep pocket giants like Apple and Amazon.

But there is apprehension that stand-alones as Spotify and Pandora, who are struggling against financial losses, could pass the hikes to their customers.