In a surprise move set to benefit songwriters and publishers throughout the U.S., three major gatekeepers of the music industry — the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI), and the Digital Media Association (DiMA) — have agreed to yet another rate increase for mechanical streaming royalties over the next four years (2023-2027).
The decision sparks the final stage of the Phonorecords IV battle many insiders assumed would be waged for months to come. Or even years, as Phonorecords III (covering 2018-2022) had been held up until a Copyright Royalty Board (CRB) ruling this past July. (Check out a complete breakdown of that bitter Streaming Services vs. Songwriters battle here.)
According to a joint statement, songwriters and publishers can expect to see a headline royalty rate of 15.35% phased in as soon as the CRB approves it. Considering the three-person judicial panel last upheld a 43.8% jump — from 10.5% to 15.1% between 2018 and 2022 — rather than a .25% one, many are hopeful for a quick go-ahead from the CRB. It certainly doesn’t hurt that everyone’s actually on the same page this time around rather than sending passive-aggressive press releases. Or as Music Business Worldwide put it in a recent Phonorecords IV headline, “Can You Feel the Love Tonight?”
“This historic settlement is the result of songwriters making their voices heard,” said NMPA president/CEO David Israelite. “Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed.
He continued, “We thank the digital services for coming to the table and treating creators as business partners. Critically, since this is a percentage rate, we know that as streaming continues to grow exponentially, we will see unprecedented value of songs.”
Garrett Levin, Chief Executive Officer at The Digital Media Association, Israelite’s counterpart on the streaming platform side, echoed his encouraging vibes, saying, “For streaming services, this moment presents an opportunity to pursue new collaborations with publishers and songwriters in the context of economic certainty that will support continued innovation. Perhaps more than anything, this agreement demonstrates the potential for industry progress when parties come to the table for good faith discussions.”
Believe it or not, publisher groups didn’t expect Phonorecords IV negotiations to even begin until September 2022, with a final agreed rate on track for 2023. When rates are determined after a term starts, streaming services are responsible for paying rightsholders the difference between the initial and updated rates. Avoiding this arduous process is a win-win for everyone, especially songwriters and publishers — who will now be paid their royalties in full on time.
In addition to the headline rate increase, the new decision provides for increased royalties going to songwriters and publishers under alternate rate structures; improving royalties when streaming subscriptions are sold bundled with other products and services; and governing the types of offers services can use to attract new subscribers.
With Phonorecords III now governing royalty rates, and Phonorecords IV set to increase them further, songwriters and rightsholders should expect to see their streaming publishing revenue increase exponentially — a well-deserved and much-needed sign of relief for the songwriters driving popular and underground culture across the country.