US Copyright Royalty Board holds hearings on mechanical rates

US Copyright Royalty Board holds hearings on mechanical rates

Over the coming days, a panel of three copyright judges in Washington DC will hear proposals from stakeholders regarding the mechanical royalties paid to songwriters and publishers over the next five years for the use of music on digital platforms, CDs and downloads. As streaming is becoming the main way for consumers to access music, these proceedings will be crucial for rights owners. 

Starting on March 8, the Copyright Royalty Board, an entity that sits within the Library of Congress' Copyright Office will hear the proposals from all parties involved. On one side, the National Music Publishers' Association (NMPA), alongside the Nashville Songwriters Association International (NSAI), will act on behalf of a united music community, following decisions from record labels (RIAA and A2IM) not to challenge NMPA rates proposals. 

On the other side, technology companies such as Google, Apple, Amazon, Spotify and Pandora will present arguments as to why rates should be kept as a low level. All parties have already filed briefs indicating their positions.

The NMPA/NSAI proposal calls for the existing statutory rates of $0.091 for CD and $0.24 for ringtones extended to cover 2018 to 2022. For streaming services, the NMPA/NSAI propose a determination based on a per stream rate, or on a percentage of advertising/subscription revenues or a combination of both. Following the hearings, the CRB has until December 15, 2017 to determine the rates. 

In a letter to songwriters, David Israelite, president/CEO of the NMPA, said that while multi-billion-dollar tech companies are "creating new ways to distribute music, they are also fighting in this trial to pay as little as possible to songwriters for the songs that drive their businesses." One of the reasons for this is that songwriters are obliged to go through what Israelite calls a "fight for royalty rates through a long, extremely expensive CRB trial against giant digital companies with substantially more money and power."

He added: "Today these three [CRB] judges [will] determine what songwriters are paid for what has become the music industry’s most significant growth sector: interactive streaming." For Israelite, "a rate structure that allows global tech companies to build their empires on the backs of songwriters, without providing those songwriters with fair compensation, is unsustainable. And as interactive streaming continues to grow, and other sources of mechanical revenue — like physical products and digital downloads — continue to shrink, ensuring songwriters are fairly compensated has become critical."

The NMPA pledged to work on behalf of songwriters and publishers "to achieve better, fairer royalty rates for all songwriters and music publishers," by asking the CRB "to adopt a structure that recognises the inherent value of a song, the value of a subscriber’s payment to access those songs, and all of the revenue that digital services generate from offering your music."

The NMPA and NSAI have asked songwriters to sign a letter "encouraging Google, Apple, Amazon, Spotify and Pandora to do the right thing. Stop litigating against songwriters and pay them a fair rate for their songs. It’s not too late to do what’s right for songwriters." The petition can be found here.

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