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.”
