Spotify, Amazon and Pandora are proposing a reduction in royalty rates for 2023-2027. According to Billboard, the major streaming services filed to the US Copyright Royalty Board (CRB) on October 21 proposing rates that are significantly lower than the royalty rates during the 2018-2022 period.
According to Consequence, the upcoming four years are known as CRB Phonorecords IV, signifying the fourth period of rate determination. This follows Phonorecords I for 2008–2012, Phonorecords II from 2013–2017, and Phonorecords III from 2018-2022.
Phonorecords III depicted an increase over the previous two Phonorecords periods, climbing and climaxing in a royalty rate of 15.1% of a service’s revenue in the closing year. However, that rate is currently being disputed in Appeals Court. Directly after the case went to appeal, Spotify reinstated their decreased Phonorecords II rates.
While the National Music Publishers’ Association (NMPA) had pursued a rising headline rate of 20% of a digital service’s revenue, Spotify, Amazon and Pandora have proposed dropping the headline rates close to 10.5%. This newly proposed rate would decrease the headline rate to pre-2018 levels.
Apple Music however is going against the grain. Apple will stick to the judge’s ruling in the Phonorecords III appeal and will use a simplified model of the rate formula that is decided. Depending on the judge’s decision, Apple could present a much better deal for artists through the 2023-2027 period. Yet, there is still the possibility of it continuing to extend the already existing trends.
According to Consequence, the Digital Media Association (DiMA) backed the decreasing rates arguing that streamers needed “billions of dollars invested into catalogs,” to compete. DiMA also claimed that a broadening listener base would prompt additional revenue that would spillover in time.
As of now, the war between streaming services and artists has no end in sight. The proposed reduction in royalty rates by Spotify, Pandora and Amazon is nothing new in the grand scheme of things.