In a ruling issued this past Saturday, the Copyright Royalty Board has mandated a nearly 50% increase in payments to songwriters, according to a report from Variety. The ruling concludes a prolonged dispute between the National Music Publishers’ Association and the Nashville Songwriters’ Association International against services including Amazon, Apple, Google, Pandora, and Spotify.
Songwriters had asked the CRB to grant the greater of 15 cents per 100 streams or $1.06 per user per month, though they did gain ground. For the past 10 years –- since the dawn of streaming -– writer royalties had been strictly based on a percentage of each streaming service’s revenue, putting them at the mercy of subjective corporate decision-making.
The songwriters made the case that the existing system was crafted to help boost a then-nascent industry but had outlived its usefulness to the point of becoming a conflict of interest. What in effect had largely become big box streaming services were using music as a loss leader to boost market share and sell other products.
The ruling streamlined the payout formula and increased the royalty rate 43.8% in favor of artists and songwriters, who will now receive $1.00 for every $3.82 earned by their respective labels. Previously, a complex calculation determined payouts on a case-by-case basis which usually favored streaming services and labels over the artists who actually created the music. While the increase not expected to hurt big, established services like Amazon, Apple, and Google, Spotify and Pandora may feel the crunch of having to part with a greater portion of their margins.
NMPA president and CEO David Israelite said, “We are thrilled the CRB raised rates for songwriters by 43.8% – the biggest rate increase granted in CRB history,” continuing, “Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.”
“The bottom line is this is the best mechanical rate scenario for songwriters in U.S. history, which is critically important as interactive streaming continues to dominate the market.”