Last week, the latest argument broke out about the US Copyright Royalty Board (CRB) rate-setting process for publishing royalties from on-demand audio streams, after publishers and streaming services filed their proposals for what they think those rates should be from 2023 to 2027. ‘Phonorecords IV’ as this round of rate setting is known.
Publishing body the NMPA strongly criticised the proposals of the DSPs, but the actual filings weren’t public yet. Now they are. Well, sort of. You can browse them here on the CRB website, although there are lots of redactions keeping some of the juicier details private for now.
Remember, the NMPA had already briefed reporters on its proposals: that streaming services should pay publishers whichever is greater on a month-by-month basis of: 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.
It’s going to take time to draw out the exact proposals, but there are needles in the haystack. Apple’s filing, for example, proposes “by the greater of (a) an all-in percentage of revenue less performance royalties, and (b) a per-subscriber or per active user minimum or mechanical floor, tiered to support a variety of services and continued market segmentation.”
It also comes out strongly against any ‘total content cost’ [TCC] formula: as in setting mechanical royalties based on a percentage of what the DSPs pay to labels (the 40% part of the NMPA’s proposal above). “The TCC overrides all the careful work of this tribunal by importing rates from an entirely different set of negotiations with an entirely different set of rights holders into the proceeding,” is Apple’s view, throwing in a “complementary oligopoly power of the three major labels” reference for good measure.
There is some interesting material on bundles too – timely given that Apple, Amazon and now Google all offer music as part of service bundles. “Apple proposes that royalties be discounted based on the proportional value of the standalone price of the components of the bundle. By way of example, if the bundle is priced to consumers at a 20% discount compared to the standalone price of the various components of the bundle, then royalties will be reduced 20% as well,” its filing suggested.
We’ll be going through the filings today looking for other key points. Will this all spark another round of rows between the DSPs and NMPA? Probably. The former group’s representative body DiMA is trying to get ahead of that with a statement from its CEO Garrett Levin; a primer published on its site; and an op-ed for Billboard targeting “cognitive dissonance” in this debate.
“I believe the answer lies not with any rush to judgment or allusions to war, but in truly grappling with this cognitive dissonance – ever-growing revenues for rightsholders, billions of dollars invested into catalogs, and new tools and features that help bring more music to more fans than ever before in a highly competitive landscape, alongside genuine frustrations by creators,” said Levin. “How do we make modern music economics work for everyone? That should be our focus – preserving long-term industry growth and ensuring that it benefits as many people as possible.”
We’re sure we’ll be hearing from the NMPA and other interested parties today, so we’ll bring you any updates on Monday on the discussion of the CRB filings.
Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!