WIN calls to maintain one statutory royalty rate in the US

Following concern among independent labels, the Worldwide Independent Network (WIN) has spoken out against theCopyright Royalty Board (CRB) in the US, which has been pushing forvariable statutory royalty rates for recorded music.

“The independents’ catalogues are­ it could be said­ the ­essential ingredient to success in the digital market place but the majors continue to try and split the industry apart to leverage more for themselves at the expense of everyone else,” said Alison Wenham,Chief Executive at WIN, the representativefor the worldwide independent music community.

The CRB has approached the US Copyright Officerequesting the ability to set differing digital royalty rates for different labels. This would unintentionally mean streams by independent artists like Chet Faker (Future Classic), Sia (Inertia/Monkey Puzzle) and Taylor Swift (Big Machine) will accrue less money than acts signed to the big three major labels.

The CRB’s request from the Copyright Office followed an announcement in late September where theRegister of Copyrightsagreed to consider a newpayment structure. This was apparently sparked by theUS Copyright Office's decision to makecertain direct licensing agreements – like thosenegotiated by indie licensing organisation Merlin and internet radio service Pandora in the US – admissableas potential benchmarks in future royalty rate-setting decisions.

At the time Pandora spokesman Dave Grimaldi said: “We are pleased that the Copyright Office affirmed the admissibility of Pandora’s agreement with Merlin as a valid benchmark in the Copyright Royalty Board proceedings.”

According to MBW, the agreement between Pandora and Merlin adheres to the US statutory rate of $0.0014 per stream with artists payed directly via SoundExchange. However when a popular song passes a predetermined threshold of plays, the statutory royalty rate dips to$0.0013 per stream.

It should also be noted that whilst Pandora has been lobbying to reduce its statutory per-stream payout to labels via SoundExchange, unlike its streaming competitors it doesn’t have direct deals with the major labels.

Interestingly, an unnamed “owner of one large global label” indicted to MBW that Sony and Universal are running a lobbying campaign to sway the outcome. “[…] what is really shocking is the positioning of the two super-majors and their mouthpiece, the RIAA, supporting multiple statutory rates,” the source said.

In Wenham’s statement posted on October 5 she said: “To create imbalances in what companies and the artists signed to them receive from digital transactions will simply cause harm, and not serve expansion of choice for the consumer and for the creative community.”

Arrangements are now being made to decipher whether new statutory rates will become law in the US during the term of January 1, 2016 to December 31, 2020. The CRB will deliver its decision for webcasting rates during the term no later than December 16.

Read Alison Wenham’s full statement below:

The worldwide independent industry calls for the maintenance of single
rate collective licensing in the US as it ensures that there can be no
discrimination towards artists and companies in an already highly
competitive market place. To create imbalances in what companies and the
artists signed to them receive from digital transactions will simply cause
harm, and not serve expansion of choice for the consumer and for the
creative community.

The independents’ catalogues are ­ it could be said ­ the ­ essential
ingredient to success in the digital market place but the majors continue
to try and split the industry apart to leverage more for themselves at the
expense of everyone else. If this is allowed to take root in the US it
will have disastrous consequences for the whole industry.

Worldwide, the independents have always upheld the benefits of collective
licensing to provide certainty and efficiency to licensors, licensees and
the consumer ­ not to achieve a rate it may be assumed independents
couldn’t otherwise get for themselves. This is completely missing the
point. The benefits of collective licensing in an emerging market is to
support innovation and competition ­ multiple statutory rates would kill
that stone dead.