Is the war between publishers and streaming services over? The National Music Publishers’ Association (NMPA), the Nashville Songwriters Associations International (NSAI) and the Digital Media Association (DiMA) just came together to announce a settlement on Wednesday (Aug. 31) regarding U.S. mechanical streaming rates for 2023-2027. This would settle the copyright royalty board proceeding known as “Phonorecords IV.”
The agreement sets the headline royalty rate for this period at 15.35% of total revenue, which will be introduced gradually over the course of the five-year term. Earlier this summer, songwriters and publishers won a raise in streaming headline royalty rates from 10.5% to 15.1% over the 2018-2022 period. (That proceeding was known as “Phonorecords III”).
The headline rates escalate from 15.1% of total revenue in 2023 to 15.2% in 2024 and then a half a percentage point increase in each of the remaining three years, peaking at 15.35% in 2027.
This settlement will also change other important factors in U.S. mechanical streaming rates, including increases to per-subscriber minimums and Total Content Costs (TCC). According to the joint announcement of the deal, this also “modernizes” the way music streaming-related product and service bundles are treated and has updated its rules on how streaming services can incentivize potential subscribers. Further information on these changes is still unknown.
“This agreement represents the commitment of the streaming services to bringing the best music experiences to fans and growing the streaming ecosystem to the benefit of all stakeholders, including the creative foundation of songwriting,” says Garrett Levin, president and CEO of DiMA, the trade organization representing the interests of members like Amazon, Apple, Google (YouTube), Pandora, and Spotify. “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.”
NMPA president and CEO David Israelite adds, “This historic settlement is the result of songwriters making their voices heard. Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed. 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.”
Bart Herbison, executive director of NSAI says, “This collaborative process will lead to increased songwriter compensation from digital streaming companies and locks in our historic 43.8% increase from the previous CRB proceeding. Along with the upward rate momentum there are also new structures to help ensure minimum payments.”
“We welcome today’s announcement that will see increased mechanical royalty rates of 15.35% paid to songwriters in the United States from 2023 to 2027. This is the result of a long collaborative effort by the NMPA, NSAI, members of our team and from across the wider songwriting community in the U.S. to ensure recognition and fair pay for our writers. Having worked together collectively as an industry to secure a fixed increase in the Phonorecords III case last month, we are grateful for our newly strengthened partnerships with the DSP’s, which will help recognize the value that songwriters bring to the world, both now and into the future,” says Jody Gerson, chairman and CEO, Universal Music Publishing Group.
In a letter to its members, founder and executive director of The 100 Percenters, Tiffany Red, says, “Today is an important day and milestone in our continued efforts to ensure that songwriters are recognized for their contributions to music and should be adequately paid for their work. The landmark NMPA, NSAI & DIMA agreement ensures a 15.35% rate increase over the next five years that cannot be appealed pending the CRB’s final confirmation. We want to give thanks to NMPA, NSAI, and DIMA and special recognition to David Israelite for his tireless efforts and work to make this possible and for ensuring that all songwriting advocacy groups were informed and up to date throughout this entire process. This is a proud moment for The 100 Percenters as we continue to work towards a more fair and equitable creative economy for songwriters and all music creatives.”
Merck Mercuriadis, founder and CEO of Hipgnosis, also weighed in on the decision, saying, “Hipgnosis has been fighting and advocating for Songwriters for every day of its existence. It’s the reason I started the company. Songwriters winning the CRB III appeal was an incredibly important step but it was an imperfect positive. What’s been achieved with this CRB IV result improves that dramatically giving Songwriters stability for the next 5 years at the highest rates ever paid in the streaming era, without arguments or fear of appeal. For that, the streaming services, DiMA and Garrett Levin should also be applauded. This is another important step towards finally recognizing that the Songwriter and the Song are the most important components in the music industry.”