This week, streaming services and US body the NMPA have filed their proposals for how the Copyright Royalty Board (CRB) should set publishing rates for on-demand audio streams in the US from 2023 to 2027. Which, it’s important to note, is the *next* period after the 2018-2022 rates that generated such animosity when some streaming services appealed against the CRB’s decision – a process that is still going on.
Is the 2023-2027 rate-setting process less divisive. No. No it is not. Even before the various entities’ filings are published, the battle for public and industry opinion has already heated up to boiling point.
Start with the statement put out by NMPA boss David Israelite. “We now know definitively what the digital streaming services think of the songwriters that make their businesses possible. Amazon, Spotify, Apple, Pandora and Google have proposed the lowest royalty rates in history. Not only do they propose rolling back rates and terms to erase all gains over the last 15 years, but they actually are proposing a structure worse than at any point in the history of interactive streaming,” said Israelite.
“It is disappointing, but not surprising, given how they have treated songwriters over the years, including their continued assault on the rate victory that was achieved in 2018 which they are still appealing four years later. The next time you see a billboard, paid ad, or token gesture from a streaming service claiming to value songwriters, remember that their actions speak louder than any hollow gestures. This fight has just begun.”
For the other side, see the press release put out by DiMA, the representative body for the streaming services. Each of them filed their own proposals with the CRB this week, but DiMA is handling the process of setting out their defence publicly. Its statement is much longer than Israelite’s so we can’t publish it in full here, but its arguments include:
Streaming is the reason the recorded music business is growing; it is also driving “major IPOs, headline-grabbing catalog sales, and bullish investments” in the industry; that differing views over what the rates should be are “a well-established feature of modern music licensing”; and that songwriter royalties are affected by the terms of their deals with publishers, and the fact that “the number of songwriters contributing to hit songs has grown astronomically”.
These are well-rehearsed arguments on both sides. But another of DiMA’s arguments is one that few DSPs would be bold enough to raise publicly themselves – and even DiMA takes a distancing step away from it by citing external sources.
“The balance of payouts between recorded music and publishing is increasingly noted by various colleagues and industry observers… and is relevant to the larger question of fair return for all participants in the music community” is how it puts it, with Hipgnosis, Billboard and MBW among the links out.
The battle lines are clearly drawn here. The NMPA sees the streaming services’ proposals (and their appeal against the last set of rates) as an assault on songwriters. But the DSPs seem more willing than ever before to pop their heads above the parapet and suggest that if publishers are to get a bigger slice of the streaming pie, it should come from the labels’ portion rather than from the streaming services’.
According to Billboard – briefed by the NMPA, so the figures are more than just speculation – the publishing body’s proposal is that DSPs will pay publishers either 20% of their service’s revenue; 40% of what is paid to record labels and other master recording owners; $1.50 per subscriber; or $0.0015 per play – basically whichever of those four is greater on a month-by-month basis.
DiMA has already published an infographic suggesting that on average, recordings rightsholders get 55% of streaming revenues. Using the rate proposals above, 20% of service revenues to publishers would mean 25% left for the DSPs, while 40% of label payouts would leave them 23%.
Whether that is sustainable, and – if things get really antsy – whether the DSPs bring up the question of whether the fact that major publishers are owned by major labels means they can *only* seek a bigger slice from the DSP cut rather than the recordings cut, will be key to the upcoming battle. And as you can see, it IS already a battle.