Streaming Services Propose "Lowest Royalty Rates In History" For Songwriters

The system which guides how songwriters are compensated by streaming services is scheduled for a major overhaul, though there’s fierce debate on which side of the decimal to start adding zeros. According to a recent report from Music Business Worldwide, streaming services are proposing the “lowest royalty rates in history” ahead of an industry review.

Streaming services including Spotify, Apple, Amazon, Pandora, and Google all filed documents with the US Copyright Royalty Board (CRB) last week, detailing what they think they should pay songwriters for the next five years. According to David Israelite, president/CEO of the National Music Publishers Association (NMPA), “this is the most important CRB trail we’ve ever had.”

“We will be fighting to raise significantly what streaming services pay songwriters, and we will now see with full transparency to what degree Spotify, Amazon, Apple, YouTube and Pandora are trying to cut what little they currently pay,” Israel told Music Business Worldwide.

In accordance with the Copyright Right, the CRB is required to conduct proceedings every five years to determine any changes to the current royalties system. If accepted these changes, known as the Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV), also referred to as CRB IV, would guide streaming royalties for songwriters for 2023–2027.

“Songwriters should all take note of what these giant technology companies propose – their proposals prove how much, or how little, they truly value the creators they rely on,” Israel said.

Though the documents submitted by the streaming companies are not yet available to the public, the NMPA has proposed a four-part formula for determining royalties for publishers and their songwriters.

20% percentage of revenue; or
40% of what record labels and artists receive; or
$1.50 per subscriber; or
$0.0015 per play

The regular review of royalties for songwriters comes as the debate over compensation from streaming platforms continues in the often opposing worlds of commerce and art. Last summer, Spotify CEO Daniel Ek made headlines when he said that artists need to make more music if they want to make more money, rather than demanding higher pay for the music they have already released. Ek, who boats a net worth of roughly $4.1 billion, told Music Ally that it’s “not enough” for artists to release music “every three to four years.”

“It is disappointing, but not surprising, given how they have treated songwriters over the years, including their continued assault on the rate victory that was achieved in 2018 which they are still appealing four years later,” Israel said.

In 2018, songwriters and publishers won a major deal in the previous CRB review. The ruling stated that royalty rates were to rise 44% in the market between 2018 and 2022. After the decision was ratified in February 2019, the major streaming companies came out in opposition against the ruling, stalling it in appeals for the past two years. With the legal quagmire of the previous ruling still unresolved, the next CRB review is all the more consequential.

“The next time you see a billboard, paid ad, or token gesture from a streaming service claiming to value songwriters, remember that their actions speak louder than any hollow gestures,” Israel said of the proposed rate changes. “This fight has just begun.”

[H/T Music Business Worldwide]