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COPYRIGHT ROYALTY BOARD AFFIRMS RATE INCREASE AT LAST (UPDATE)

The Copyright Royalty Board has handed down a decision in the Phonorecords III proceeding, which resolves a longstanding dispute over streaming rates and upholds a higher royalty for copyright holders. Several DSPs, including Spotify, Amazon, Google and Pandora, appealed the increase of the rate from 10.5% to 15.1%, won by the National Music Publishers’ Association (NMPA) and Nashville Songwriters Association International (NSAI) for the years 2018-2022, and while that appeal was pending, the lower rate was paid to rightsholders. The 7/1 decision upheld the 15.1% increase and also returned the Total Content Cost (TCC) and bundle definitions to Phonorecords II levels. A trial for CRB IV, determining rates for 2023-27, is slated for later this year. Count on more tussling by the interested parties.

“Today the court reaffirmed the 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,” proclaimed NMPA topper David Israelite. “We will fight to increase the TCC, or percentage of label revenue, which amounts to an insurance policy for songwriters, in the next CRB and will also fight for stronger terms regarding bundles.  

“This process was protracted and expensive and though we are relieved by the outcome, years of litigation to uphold a rate increase we spent years fighting for is a broken system. 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. We appreciate Pryor Cashman LLP's relentless work to secure this result and the voices of all songwriters and publishers who supported this mission. As an industry, we move forward united as we press for even fairer rates in the next CRB, starting this fall."  

“This verdict represents mixed news,” added NSAI Executive Director Bart Herbison. “The good news is that songwriters received the 15.1% 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. We will return our focus to the next CRB proceeding, which is already underway. Along with the NMPA, we are asking for further increases going forward.

“More and more songwriters continue to leave the business. Some may have been able to hold on had the streaming companies not appealed. We do not want to see anyone else leave because arrearage payments cannot get to them in time. A few thousand dollars might make that kind of difference to a writer. We thank the NMPA and the songwriters who testified during CRB III, NSAI board members Steve Bogard, Lee Miller and Liz Rose. Without them, there may have been no increase in royalties.”

“We are pleased with today’s Phonorecords III decision upholding the increase to a 15.1% mechanical rate,” Jody Gerson, Chairman and CEO of Universal Music Publishing Group, said. “But there is more work to be done in the fight to protect songwriters, especially with the upcoming trial concerning Phonorecords IV, which will determine mechanical rates for the next five years starting in 2023. By staying aligned and collaborative, publishers and songwriters can continue making progress together.”

“Today’s decision was a victory for songwriters,” reads a quote from Recording Academy CEO Harvey Mason Jr., “as the Copyright Royalty Board reaffirmed the 15.1% headline rate increase in royalties paid by streaming services to publishers and songwriters for the 2018-22 time period. We applaud the judges for upholding this decision and the NMPA for its tireless work fighting the appeal. The Recording Academy will continue to champion the songwriters and other music people in our community and fight to ensure they are fairly compensated for their contributions to the musical process."

Digital Media Association President and CEO Garrett Levin said it’s time for labels, publishers, writers, artists and the services "to engage in comprehensive discussions to figure out the right royalty-sharing balance going forward.” Noting that “a significant increase” in royalties lies ahead, he said, "Streaming services are committed to working with the MLC and music publishing companies to facilitate the accurate distribution of royalties."

"This proceeding is also a reminder that rate settings do not—and cannot—take place in a vacuum," Levin added. "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 industry profits while reporting consistent double-digit revenue growth as a result of streaming.”

Photos from top: David Israelite, Bart Herbison, Harvey Mason Jr.

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