Since the dawn of streaming nearly 10 years ago, writer royalties have been based on a strict percentage of each streaming service’s revenue, putting songwriters at the mercy of corporate decision-making. In a court ruling issued Jan. 27 in Washington D.C., the Copyright Royalty Board has voted to increase songwriter rates for music streaming by 43.8 percent over the next five years.
President and CEO of the National Music Publishers’ Association, David Isrealite, calls the victory “the biggest rate increase granted in CRB history.” The federal decision ruled in favor of the NMPA and the Nashville Songwriters’ Association International, requiring Amazon, Apple, Google, Pandora and Spotify to pay more for the use of music.
“Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market,” Isrealite says. “The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.”
For every $3.82 to the label, writer/publishers get $1.00.
“The CRB was a long and difficult process but songwriters and music publishers together presented a powerful case for higher streaming royalty rates,” says Bart Herbison, executive director of the Nashville Songwriters Association International. “Songwriters desperately need and deserve [these] rate increases.”
The change will be insignificant to the bottom lines of tech giants Apple, Amazon and Google. Yet, smaller streaming services like Spotify and Pandora may feel the cost.
Arguing in favor of the status quo were Amazon, Google, Pandora and Spotify. Apple broke with the ranks, however, conceding that the current royalty rate was much “too complex” and “economically unsound.” Apple advocated for “a single per-play rate that is the same for all services,” which signals an artistic sympathy that may have interesting market implications moving forward.