The Copyright Royalty Board has reportedly been asked by major rights holders and publishers to increase mechanical royalties for physical products by 32%.
This increase would increase the mechanical royalty rate from 9.1 cents to 12 cents per title for physical products (CDs, vinyls), downloads, ringtones and music packages, by Variety. The 9.1 cent rate was rolled back in 2008 at the start of the Phono IV process, which involves royalties for both physical and digital formats.
Supporters of the motion at the CRB, who demanded an increase to 15 cents, included major label members from the Recording Industry Association of America (RIAA), the National Music Publishers Association (NMPA) and the Nashville Songwriters Association International (NSAI). This would mark a major victory for songwriters in the United States and is currently awaiting CRB approval.
Sony Music Publishing President Jon Platt said the royalty rate setting process is “the most critical issue facing songwriters and music publishers in the United States right now.”
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Raising songwriters’ mechanical royalties has been a prominent discussion since the boom in physical vinyl sales. This increase in physical sales isn’t on the scale of streaming revenue, but it’s certainly nothing to scoff at as it shows no signs of diminishing.
Streaming platforms have also been criticized for their lack of transparency, especially Spotify. A letter signed by Democratic Representatives Tony Cardenas, Yvette D. Clarke and Judy Chu raised concerns about Spotify’s controversial discovery mode.
“If two competing artists both sign up their new track for the program, any benefit could be forfeited, meaning the only profit goes to your company’s bottom line,” the letter states. “For artists from diverse backgrounds, who often struggle to access capital, the assumption that they now have to pay to be found by new consumers on Spotify presents a particularly serious problem.”
NMPA President and CEO David Israelite said Variety that they can now focus on increasing streaming rates and battling some of the biggest companies in the world.
“This new settlement gives songwriters a 32% increase on vinyl, CD and download sales – increasing the rate from 9.1 cents to 12 cents – and also includes an annual cost-of-living adjustment for fight inflation,” Israelite said. “This overwhelmingly positive outcome is due in large part to creators having their voices heard in the CRB process. With this filed settlement, we are paving the way to focus solely and relentlessly on increasing streaming rates. We are fighting against the biggest corporations in the world, pushing for the lowest royalty rates in history, songwriters and their advocates are more united than ever.”