The Copyright Royalty Board (CRB) has reaffirmed its plans to increase the headline rate of royalties paid to U.S. songwriters and publishers from streaming platforms from 10.5 to 15.1 percent, for the years between 2018 and 2022, despite continued opposition from Spotify and other streaming platforms.
In January 2018, the CRB ruled that the royalty rates for a songwriter or publisher in the U.S. for streaming and other platforms would get an increase for the first time since 2006. Spotify and other streaming platforms, including Google/Alphabet, Amazon, and Pandora, legally appealed the increased rates and argued that they have already paid out billions in royalties and the raise in royalties will make their business models unsustainable. Apple, the second-largest streaming platform, was not involved in this appeal.
“The streaming services thank the judges for their efforts,” said Garrett Levin, CEO and president Digital Media Association in a statement to American Songwriter, following the decision of the CRB to setting royalty rates that digital streaming services must pay to music publishers for the rights to reproduce and distribute musical works. “Today’s decision reflects a significant increase in the royalties that will be paid to publishers. The work to give effect to these new rates will soon begin in earnest. The streaming services are committed to working with the MLC (Mechanical Licensing Collective) and music publishing companies to facilitate the accurate distribution of royalties.”
Levin added, “This proceeding is also a reminder that rate settings do not, and cannot, take place in a vacuum. Today’s decision comes as the three major label groups, which operate the world’s three largest music publishers, continue to earn the lion’s share of the industry profits while reporting consistent double-digit revenue growth as a result of streaming. Looking ahead, streaming services believe it’s time for all stakeholders—labels, publishers, writers, artists and the services—to engage in comprehensive discussions to figure out the right royalty-sharing balance going forward.”
An earlier proposal suggesting the increased rate from 10.5 to 15.1 percent over the five-year period was revised by a three-judge board, after streaming platforms asked for a reevaluation in terms of bundle sales, including family plans and other discounts, and capping label revenue.
“This verdict represents mixed news,” said Bart Herbison, CEO, Nashville Songwriters Association International, in a statement. “The good news is songwriters received the 15.1 percent headline rate we won four-and-a-half years ago. The bad news is that the definition of bundled services and of total content costs, one of the streaming rate tiers, were not what we wished.”
Herbison added, “We will return our focus to the next CRB proceeding which is already underway. Along with the National Music Publisher’s Association (NMPA), we are asking for further increases going forward.”
In 2021, the Union of Musicians and Allied Workers started the Justice at Spotify campaign to draw attention to low payout rates by the platform. Spotify responded by launching its Loud & Clear web portal to offer transparency about payouts.
“Today the [CRB] reaffirmed the 15.1 percent headline rate increase we earned four long years [ago], confirming that songwriters need and deserve a significant raise from the digital streaming services who profit from their work,” said David Israelite, CEO, and president of the NMPA. “Now, songwriters and music publishers finally can be made whole and receive the rightful royalty rates from streaming services that they should’ve been paid years ago. We will work to ensure that the services quickly backpay copyright owners as they are required by law.”
A trial for CRB IV, which will determine rates for the five-year period between 2023 and 2027 will begin later this year.