STREAMING ROYALTY RATE TO TOP 15%

The National Music Publishers’ Association, Nashville Songwriters Association International and Digital Media Association have reached a settlement in the Phonorecords IV proceeding for certain mechanical streaming rates in the U.S. for 2023-2027—ushering in what they hail as "a new era of collaboration."

The headline rate (the proportion of a service's annual revenues paid to songwriters) will rise next year to 15.1% of revenue, to 15.2% in 2024 and then half a percentage point until it hits 15.35% in 2027. Subscription services such as Spotify are going up to 26.2% on the sum paid to labels—up from 21%—or $1.10 per subscriber, whichever is less.

The participating organizations say the new rates promote sustainability, innovation and continued investment in the industry. The updated rate comes as the Mechanical Licensing Collective is fully operational and continues to deliver commission-free royalty payments as a result of 2018's Music Modernization Act.

The rates set by Phono III, which covered 2018-2022, took a while to kick in; most services kept paying the Phono II rate of 10.5%. Last year, with a new formula in place, the rate rose to 14.4%.

Changes to other components of the rate include increases to per-subscriber minimums and “total content costs” calculations reflecting the rates services pay to labels. It also modernizes the treatment of “bundles” of products or services, which includes music streaming, and updates how services can offer incentives to draw in new subscribers.

The deal was agreed to by DiMA member companies Amazon, Apple, Google, Pandora and Spotify, as well as NSAI’s board of directors and the NMPA board.

“This historic settlement is the result of songwriters making their voices heard," said NMPA President & CEO David Israelite (pictured). "Instead of going to trial and continuing years of conflict, we move forward in collaboration, with the highest rates ever, guaranteed. We thank the digital services for coming to the table and treating creators as business partners. Critically, since this is a percentage rate, we know that as streaming continues to grow exponentially, we will see unprecedented value of songs.”

“This collaborative process will lead to increased songwriter compensation from streaming companies and locks in our historic 43.8% increase from the previous Copyright Royalty Board proceeding," NSAI Executive Director Bart Herbison explained. "Along with the upward-rate momentum, there are new structures to help ensure minimum payments.”

DiMA President and CEO Garrett Levin added, “This agreement represents the commitment of the streaming services to bringing the best music experiences to fans and growing the streaming ecosystem to the benefit of all stakeholders, including the creative foundation of songwriting."

“We welcome today’s announcement," reads a quote from UMPG ruler Jody Gerson. "This is the result of a long collaborative effort by the NMPA, NSAI, members of our team and people from across the wider songwriting community in the U.S. to ensure recognition and fair pay for our writers. Having worked 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 DSPs, which will boost recognition of the value songwriters bring to the world.”

CRB IV, said Merck Mercuriadis, chief executive and founder of Hipgnosis Song Management, gives “songwriters stability for the next five years at the highest rates ever paid in the streaming era without arguments or fear of appeal." He continued: "For that, the streaming services, DiMA and Garrett Levin should be applauded. This is another important step toward finally recognizing that the songwriter and the song are the most important components in the music in industry. The background of stability for the next five years provided by what’s been achieved with CRB IV will ensure that no discussion will ever take place again to determine how a songwriter is paid without songwriters at the table expressing the consensus views and demands of the songwriting community.”

"The AIMP [Association of Independent Music Publishers] applauds the efforts of the NMPA and NSAI, who have won a major victory for the music publishing industry with their CRB Phonorecords IV settlement," goes a quote attributed to AIMP National Chair and Nashville Chapter President John Ozier, chapter presidents Teri Nelson Carpenter (L.A.) and Michael Lau (NYC) and Atlanta Steering Committee Chair Tony D. Alexander. "In addition to building on the 44% raise publishers won in 2018 with a phased-in rate increase to 15.35%, the agreement brings big wins and significant improvements to alternate rate structures, including raising the per-subscriber penny rate and Total Content Cost (TCC). We are also happy to see better treatment of bundles that combine music with other products, and the addition of commission-free royalties through the MLC that will guarantee independent publishers and songwriters actually get the full increase from this settlement. The deal also provides benefits for streaming services, including increased certainty regarding what they owe, resulting in a deal that everyone can be happy with."

The various executives quoted above are also pleased to resume sending our calls to voice mail.