Music Publishers, Streaming Services Avoid Another Battle Royale by Setting Royalty Rates for Next Four Years

Music Publishers
Jimmy Taurrell for Variety

After a grueling, hard-fought and ultimately victorious legal battle over streaming rates for the years 2018-22, the National Music Publishers’ Association, the Nashville Songwriters Association International, and the Digital Media Association today have announced a settlement with streaming services for certain mechanical streaming rates in the U.S. for the years 2023-2027: 15.35%.

The announcement comes as a surprise, as the NMPA has been saying for months that it would push for a 20% rate for the forthcoming period. However, sources tell Variety that concessions were made on both sides, likely in the form of modifications that reach beyond the headline rate, such as the way that “bundles” — such as discounted streaming subscription rates for family and student plans — and per-subscriber minimums are treated.

Sources also say that both sides were eager to avoid another protracted, distracting and brutally expensive legal battle, to put it mildly: The fight over the previous, 2018-22 rate period went on for more than three years and cost many millions of dollars in legal and other fees.

While specifics were not provided, according to the announcement, the new deal includes a number of changes to other components of the rate, including increases to the per-subscriber minimums and the “Total Content Costs (TCC)” calculations which reflect the rates that services pay to record labels. The agreement also modernizes the treatment of “bundles” of products or services that include music streaming and updates how services can offer incentives to attract new subscribers.

These concessions presumably made up some of the difference between a 15.35% and a 20% increase, as they alter the numbers upon which the payments are calculated. For example, the “bundles” addresses the lower subscription costs for student and family plans that streaming services offer, which presumably has been updated in a way that the publishing collectives feel is more equitable.

Publishers won a big victory in July when the Copyright Royalty Board upheld its 2018 decision to raise the rate to 15.1% from the previous 11.4% for the period spanning 2018-22, despite a hard-fought, multimillion-dollar appeal from the streaming services.

The announcement states, “This agreement, supported by DiMA member companies, Amazon, Apple, Google, Pandora, and Spotify, as well as NSAI’s Board of Directors, and the NMPA Board which is comprised of leading independent and major music publishers, ensures that all parties will benefit from the growth of the industry and will be motivated to work together to maximize that growth.”

NMPA President & CEO David Israelite said, “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.”

NSAI Executive Director Bart Herbison said, “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.”

DiMA President and CEO Garrett Levin said, “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. 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.”


From Variety US