The Copyright Royalty Board has increased the royalty headline rate to 15.1% from the earlier 11.4 % for the 2018-2022 period. This increased rate was decided upon in 2018, but due to opposition from streaming services that this increased rate will make business difficult for them there was a delay.
The proposal also went under evaluation and revision by a three-judge board in 2021, following challenged faced by the opposition by streaming services. The decision was not made public at that time, but the CEO of the National Music Publishers Association (NMPA) David Israelite shared that the rate would increase as decided. A similar decision is also set for the 2023-27 period where the NMPA has argued for an increase to a 20% headline rate.
The streaming services have however not been dealt the shortest straw as the percentage of label revenue has been capped and the definition of bundling and other discount packages has been reverted to an earlier, more favorable definition.
Streaming sites had also requested the US Copyright Office for more time to pay the potential increase which raised serious opposition. The royalties in question are the center of the music industry and the music streaming economy. Now that streaming of music is more profitable due to the decrease in illegal downloading, streaming services and music companies have been constantly butting heads over royalty rates.
These mechanical royalties are paid to the songwriters and publishers by streaming services like Amazon, Google, Spotify, etc. whenever a copy of their song is made. There are totally four types of royalties – mechanical, performance, synch, and print music.
The streaming royalties are divided by free negotiation, approximately by 75/25 between the labels and publishers.
Streaming services have argued that they already pay a large amount of royalties, and an increase in publishing should be from the label’s share. This is however of no interest to the label companies.
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