January 30, 2018
The National Music Publishers’ Association raised music streaming royalties for songwriters and music publishers by more than 40 percent in an attempt to resolve a conflict between them and the streaming services, including those from Amazon, Apple, Google, Pandora and Spotify. The Copyright Royalty Board now requires those services to pay the aggrieved parties 15.1 percent of their revenue, up from a previous 10.5 percent. Songwriters and music publishers will now receive $1 for every $3.82 the recording labels receive.
The Wall Street Journal reports that the growing popularity of streaming services “have pushed artists, songwriters and publishers to step up their efforts to get a larger cut of the royalties generated from music streaming — a format that didn’t even exist when some performers signed their last record deals years ago.”
The Copyright Royalty Board devised the new rates after a trial last year. “Songwriters desperately need and deserve the rate increases,” said Nashville Songwriters Association International executive director Bart Herbison.
According to WSJ, “the new royalties seem unlikely to faze Apple, Google and Amazon — all of whom rank among the world’s richest companies and operate their music streaming services as complements to other products that generate most of their revenue.” But the new rates could have “a bigger financial dent” in the smaller Spotify and Pandora, both pioneers in streaming.
The Verge reports that, in the past month, “a bill called the Music Modernization Act has been introduced in the House and Senate,” which is “designed to streamline the music licensing process to make it easier for rights holders to get paid when their music is streamed online.”
The two bills, both of which are bipartisan, would update Section 115 of the U.S. Copyright Act, with three major changes. First, a new governing agency would be created to “issue blanket mechanical licenses to digital services, and collect and distribute royalties to rights holders.” Major labels could still enter into licensing agreements with streaming services.
Second, “mechanical royalties would be paid to songwriters whenever a copy of their track is made (be it physical or digital), and it would be based on what a buyer and seller negotiate in an open market, instead of the current rate-setting standards.” Last, the rate court system would be changed. Rather than assigning a single judge to the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI), the bill “proposes that a district judge in New York’s Southern District would be randomly assigned to each case going forward.”
The bill would “also repeal Section 114(i) of the U.S. Copyright Act” that “prevents rate courts from considering sound recording royalty rates when setting performance royalty rates.” The biggest change, however, would be that the new agency would ensure that songwriters get paid in a timely fashion. ASCAP, BMI, SoundExchange and SAG-AFTRA among other industry groups support the bill.