Copyright Royalty Board Upholds 15.1% Rate Increase, Reduces Some Protections
July 1, 2022 by LB Cantrell
The Copyright Royalty Board reached a determination of the appeal of the Phonorecords III proceedings today (July 1). The CRB decided to uphold the 15.1% headline rate increase that was determined in 2018, while returning the Total Content Cost (TCC) and bundle definitions to the Phonorecords II levels.
In 2019, Spotify, Amazon, Google and Pandora appealed the rate increase won in 2018 by NMPA and NSAI, which raised mechanical streaming rates from 10.5% to 15.1% over years 2018 – 2022. Due to this appeal, copyright owners received the lower rate while the remand was pending. The trial for CRB IV, which determines rates for 2023-2027, begins later this year.
Of the news, NMPA President & CEO, David Israelite, shares: “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. 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 with the outcome, years of litigation to uphold a rate increase we spent years fighting for is a broken system,” Israelite adds. “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‘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.”
NSAI Executive Director, Bart Herbison, says, “This verdict represents mixed news. The good news is 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 National Music Publisher’s Association (NMPA) we are asking for further increases going forward.
“The original 15.1% rate set by the CRB was to go into effect in 2018, but an appeal by streaming services delayed that. The retroactive increase for American songwriters, is supposed to be paid within six months of the verdict being finalized, but the streaming giants have asked for that time period to be extended, which we strongly oppose. Until the U.S. Copyright Office makes that determination, it is still unknown when songwriters will receive their payments. It is unbelievable that these tech companies who pay a myriad of rates across the globe have not figured this out when they realized four-and-a-half years ago they would have to,” Herbison says.
“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.”
