The US Copyright Royalties Board is preparing to issue its final verdict on publishing royalties for music streaming services from 2018-22 – otherwise known as ‘Phonorecords III’, in advance of the rates for 2023-27 (‘Phonorecords IV’) being set later this year.
To quickly recap: the Phonorecords III rates were set several years ago, but Amazon, Google, Pandora and Spotify appealed against them in March 2019. While this sparked fury from US publishers and their representative body the NMPA, the US Court of Appeals backed the DSPs in August 2020, ruling that the procedure used to calculate them needed to be sent back tot he drawing board.
The reset rates are what we’re expecting to be announced in the coming days, but even before that announcement another row is breaking out, as Variety reported. It claimed that court documents suggest “the streaming services do not expect to be successful” and that as a result they have appealed to the US Copyright Office for “more time to pay that potential increase”.
(This being the gap between what the DSPs have paid publishers while the rate-setting process dragged on, versus what they may be due to pay retroactively if the final rates are higher.)
The NMPA has already objected to this in a letter to the office, and now five US senators have waded in with their objections too, calling the DSPs’ request “extraordinary” and urging it to be rejected, and for the office to ensure that “if back royalties are owed, they are timely paid to songwriters”.
It’s a guide to the tensions that are likely to erupt again when the rates are actually announced. And remember, all this is also a curtain-raiser for what’s shaping up to be another bitter to-and-fro over the next set of rates, Phonorecords IV.
NMPA boss David Israelite has already described the streaming services’ filings for that process as “a structure worse than at any point in the history of interactive streaming”, while DiMA, the body representing the DSPs, seemed to hint in its filing that the royalties split between recordings and compositions (and thus labels and publishers) should be considered in the rate-setting process – thus potentially dragging labels into the fight.
Still, we have the Phonorecord III rates to await first, and the outcome of that will also be a key influence on the rate-setting process for 2023-27. Fiery public rhetoric doesn’t always mean an utter breakdown in trust behind the scenes, but it’s fair to say the arguments will certainly not die down even when the 2018-22 rates are set in the coming days.