Analysis

Love ISN’T in the air as DSPs’ US royalty-rates appeal kicks off


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David Israelite, president of the National Music Publishers Association in the US, has never been a man to pull his verbal punches when taking digital services to task.

“Songwriters: This week, Spotify and Amazon are quite literally taking you to court,” is how his latest guest column for Billboard begins, and it doesn’t get any less pugilistic as the article goes on.

This isn’t the whole, literal truth, though. First, because Spotify and Amazon will be joined in the courtroom in question by Google and Pandora, and second, because rather than taking songwriters to court, what they’re doing is appealing against new songwriter royalty rates set two years ago by the US Copyright Royalty Board. The anger from songwriters and publishers is very real, but they’re not in the dock.

This is an important moment in the modern music-streaming industry though, and Israelite’s blast is worth reading in full to get a handle on the specifics of that anger.

“The music industry is in the midst of a streaming renaissance but songwriters aren’t seeing the spoils,” he wrote. “Record labels have the ability to negotiate directly with streaming services and therefore receive many times that of songwriters for streams. Since songwriters are restricted by laws from 1909 and therefore must go to court to argue for raises – this case has seismic implications for creators.”

Spotify will be wincing at Israelite’s description of initiatives like its recent Songwriter Pages as “hollow PR gimmicks” but actually, his column puts its finger on some of the bigger issues swirling around this particular appeal.

First, the question of how and why streaming royalties are split the way they are between master recordings and publishing; whether that’s fair (and if not, whether it’s storing up trouble for the industry, labels included); and most thornily, how it might be changed and who’d be responsible for driving that.

Second, and more specifically relating to this CRB rates appeal, is the fact that we’re already nearly halfway through the period covered by those rates – 2018 to 2022. It won’t be that long before we’re into the lobbying process for the next five-year period, 2023 to 2028.

Israelite claimed that the US Music Modernization Act will allow the CRB judges to use the label deals “as benchmarks” which they couldn’t do before. “Therefore this fool’s errand on the part of Spotify and Amazon would only affect rates in the short term before the next rate-setting trial takes place which will use a new, better formula,” he suggested.

This week’s appeal hearing is still an important moment for the immediate future of music streaming – not to mention the day-to-day financial needs of songwriters – but it’s the next set of rates negotiations that will have the most profound implications for creators’ income and the future architecture of the streaming business.

The anger boiling up around the current appeal (especially if the ruling goes the DSPs’ way) will inevitably have an impact on the submissions for the 2023-2028 rate-setting process, as well as streaming-publishing relations in the meantime.

As ever, we’d encourage Music Ally readers to read around the dispute. There are Spotify’s arguments for it in March 2019 (and the NMPA’s rapid-response ‘fact check’ of those arguments).

There’s Israelite’s explanation of why the NMPA is particularly angry at Spotify and Amazon rather than Google and Pandora. There’s even the full 92-page filing by the streaming services setting out their appeal arguments, if you have the appetite for it, while if you have a Billboard subscription, its analysis of the rival appeal filings was excellent too.

Top photo by Bill Oxford on Unsplash

Stuart Dredge

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