The mechanical royalty rates—royalties paid out to songwriters and publishers, as distinct from those paid out to performers—will increase by nearly 44 percent over the next five years. This comes as a result of a ruling from the United States Copyright Royalty Board after hearings that were held from March through June of last year.
Currently, 10.5 percent of streaming services’ monthly gross revenue is assigned to be paid to songwriters and publishers; the payouts are determined by the number of streams in that period. That will rise each year until it reaches 15.1 percent in 2022. This year, the rate will be 11.4 percent, it will be 13.3 percent in 2020, and so on.
Songwriters and publishers have long claimed they’ve gotten the short end of the stick with regards to streaming music royalties. One songwriter, Nashville-based Kevin Kadish, claimed in 2015 that he received only $5,679 from 178 million Pandora streams. In 2016, the National Music Publishers’ Association settled a deal with Spotify to help music publishers and songwriters claim royalties, as the messiness of the current system has led to lawsuits and other negative outcomes.
The National Music Publishers’ Association was also involved in the fight for this ruling, alongside the Association of Independent Music Publishers. Variety reports that writers were looking for a per-stream rate but did not achieve that goal. However, higher rates are still seen as a victory. That’s partly because of the significant rate increase, but also because the ruling further simplifies and streamlines the terms by which the rates are paid out.
Writers will now receive royalties calculated from the new percentage on whichever is higher—the revenue, or the total content costs. This ruling also removes previously existent caps on what publishers and songwriters could receive, and it applies a late fee to streaming services that don’t make payments in a timely manner.
The decades-long process of transitioning digital music from a law-bucking disruption to a stable business in which all actors are compensated fairly and in a timely manner has been slow. But this is not the end of the story, either; the US Congress is reviewing a new bill called the Music Modernization Act. The act would base mechanical royalties around rates in an open market, change the rules of court cases regarding royalty rates, and form a collective for managing all of the above.