What Songwriters Need To Know About The Next Royalty Rate Decision
Two weeks ago, the Recording Academy announced the nominees for the 64th GRAMMY Awards. We're proud to have nominated the highest number of songwriters in the history of the awards due to a groundbreaking rule change this year that created unprecedented inclusivity and recognition of the craft of songwriting.
Unfortunately, in October when digital services submitted proposed rates to the Copyright Royalty Board (CRB) for the next five-year period, which will cover 2023 through 2027, the major streaming services such as Spotify, Apple Music, YouTube (Google), and Amazon Music proposed lowering mechanical rates back down to as low as 10.5 percent — a mechanical rate lower than the current rate.
What does this mean? It means that streaming services are trying to lower the compensation rate they pay to songwriters. Additionally, they want to redefine what revenue goes towards those royalties, which would generate the lowest amount of royalties paid in 15 years.
If these proposed rates were adopted, the tech companies would continue to grow at the expense of the music creators who create the content that makes their businesses possible. That is unacceptable.
These submissions undoubtedly set the stage for an administrative proceeding and showdown that will start next year and include witness testimony from both the digital services and the music publishers. As a songwriter myself and the Chair of the Academy's Songwriters & Composers Wing, I am committed to making sure songwriters know what's at stake in the months ahead.
My friend and Recording Academy CEO Harvey Mason jr. frames the issue clearly, stating, “As streaming services continue to grow, it's imperative that they value the work of the songwriters that are the foundation of the music they use to fuel their businesses.”
DiMA (the Digital Media Association), which represents the streaming companies, attempted to shift attention away from the low rates proposed by its members by asserting that such proceedings only "help ensure that the music distribution system works efficiently and effectively," that songwriter royalties are affected by the terms of their deals with publishers, and that "the number of songwriters contributing to hit songs has grown astronomically."
On the other hand, the NMPA (National Music Publishers' Association) believes this to be endemic of a disconcerting paradigm. "It is disappointing, but not surprising, given how they have treated songwriters over the years," the NMPA said in a statement. "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."
While it is essential that we ensure an equitable relationship between publishers and songwriters that includes full transparency, that has no bearing on the low rates that digital services are advocating for. If the streaming services prevail with their proposal, the small payments that songwriters receive from streaming and digital radio would shrink even further and music would be further devalued, jeopardizing the income and livelihood of songwriters.
During the last rate setting for the period stretching from 2018 through 2022, songwriters and publishers won a hard-earned victory as the CRB actually increased mechanical royalty rates by 44 percent, a decision that has been defended by the Recording Academy. Unfortunately, that decision was appealed by the streaming services and is still tied up in litigation, meaning those higher rates have never gone into effect.
At the same time, the CRB also recently reopened the comment period for setting rates on mechanical royalties for physical records and downloads. Music publishers and record labels had proposed keeping this rate frozen at 9.1 cents per song, the same as it's been since 2006. But critics in the songwriter community sought the opportunity to provide additional input on the impact of the outdated rate.
The CRB hearings for the new rate setting won't begin until April 2022, so there's a long process ahead before the rates are formally set by the CRB. In the meantime, continue to watch this space for updates and ways you can get involved to ensure all music makers are paid fairly for their work.