A landmark ruling passed by the United States Copyright Royalty Board late in January 2018 has taken a step to address the financial divide between writers and publisher’ streaming royalty rates. The Board’s ruling revolutionises royalty rate terms in addition to granting songwriters and publishers with a staggering 43.8% royalty increase over the next five years. In the midst of digital platforms like Spotify seeking to decrease rates even further, this is an important victory for writers and publishers.
After the radio, digital streaming services have quickly become the world’s favourite way to consume music. However, while streaming services attract millions of users and listens per year, music publishers and songwriters have viewed digital methods of consuming music as a grossly unfair and law-avoiding hindrance to the music industry. This is largely due to the financial gulf streaming royalty rates have created between publishers and songwriters and their recording labels. At the moment, writers and publishers can expect to earn a meagre average of £59 for every one million song streams.
Before the ruling, songwriter and publisher payouts revolved around the amount of streams in a given period, with streaming services apportioning a mere 10.5% of their monthly gross revenue towards writer and publisher remuneration. With the ruling, the monthly gross revenue dedicated towards royalties will begin to consistently increase each year until it reaches 15.1% in 2022. Furthermore, writer and publisher royalties will now be calculated based upon the percentage of what is greater of either the revenue or total content costs – no longer open to being dependent on the subjective view of digital platforms. These two rate changes equate to a significantly higher earned revenue for writers and publishers – one that is more befitting of their contributions to the music industry.
While this decision affects all streaming services, smaller and less-diversified companies like Tidal and Spotify are likelier to feel the brunt of the ruling’s impact over conglomerates like YouTube and Apple. The Copyright Royalty Board’s decision is open to appeal but it is unlikely one would be sought at this time.
This ruling is not the end-all of a decade of discussions surrounding royalty rates and streaming services. Realistically, until all parties in the digital music industry feel fairly compensated and recognised, royalty rates will always be a subject of concern. After months of conversations between writers and publishers and digital platforms, a bill known as the Music Modernization Act has recently been introduced to the United States Congress, which, if passed, would revolutionise royalty rate terms even further by basing them on free market rates negotiated by “buyers and sellers”.