In what is being considered a groundbreaking move on the part of songwriters, more than 2,000 of them have decided to fight all major streaming services (including but not limited to Amazon, Google, Spotify, Pandora and Apple) for better rates.
As part of an ongoing campaign that was launched before the court hearing on March 8 in Washington, songwriters have collectively signed a petition in their demand for better royalties as regards interactive streaming.
On the day of the court hearing, the CRB (Copyright Royalty Board) will be determining new rates for songwriters that will remain valid for the subsequent five years. It will be quite a tussle though, given that the streaming companies will be trying their best to reduce their rates, whereas both the Nashville Songwriters Association International (NSAI) and National Music Publisher’s Association NMPA will be lobbying for an increase.
According to the NMPA, songwriters should be paid every time their song gets played, or every time the user buys a subscription. Additionally, it has also said that it wants to share the profits that is earned with selling technology and subscriptions – something that includes access to music.
According to a letter written by the NMPA addressed to its members: “These low royalty rates have immensely benefited large digital companies who have built thriving music services used to deliver your songs and to draw consumers into their larger “ecosystems.”
As seen in the aforementioned excerpt, the NMPA has particularly singled out Spotify for “continuing to offer a full access music service that is free to consumers.”
The letter continues: “This means Spotify can make all of your songs available while charging consumers nothing and paying you (almost) nothing.”
For over 100 years now, the American government has been in charge of setting the rates for mechanical royalty, first starting in 1909 when the Congress had determined that right of the songwriters would be subjected to a license that is compulsory in nature. This implies that it is possible for anybody to record the work of a songwriter for a specified rate – without any prior permission or approval.
While the Congress used be in charge of setting said rate, it soon delegated the job to the judges of the CRB. The rates that are currently running were set around 10 years ago – back when music streaming was at its budding stages.
This week the most important trial most people have never heard of will begin in Washington, D.C. This little-known and rarely reported on proceeding will determine the royalty rates that digital streaming services must pay to play your songs for the next five years.
As a creator whose songs fuel the entire music industry, you need to know about this critical fight that will determine how your work is valued. Because in a world where on-demand streaming is how we listen to music, the royalty rates decided at this trial will define the future success for you and your fellow songwriters.
On Wednesday, March 8th, two sides will appear before a panel of three judges known as the Copyright Royalty Board (CRB). On one side, giant technology companies Google, Apple, Amazon, Spotify and Pandora will argue to reduce the already low mechanical royalty rates they pay to play your songs. On the other side will be your music publisher, through the National Music Publishers’ Association, fighting alongside the Nashville Songwriters Association International (NSAI) for a much needed increase in the royalties you are paid.
The last ten years have seen incredible and innovative advancements in how your songs are delivered to music fans. Technology companies are a critical part of this new digital
story. But, while these 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.
How can they do this? Unlike other creators—such as recording artists, painters, sculptors, authors, actors, photographers, video game programmers—who are able to negotiate freely their own rates, songwriters and music publishers are forced to fight for royalty rates through a long, extremely expensive CRB trial against giant digital companies with substantially more money and power.
In fact, the government has been setting your mechanical royalty rates for over 100 years— beginning in 1909—when Congress determined that these rights would be subject to a compulsory license. This means that anyone can record a songwriter’s work for a fixed rate without permission or approval. Congress used to set this rate, but has since delegated the task to the CRB judges.
Today these three judges determine what songwriters are paid for what has become the music industry’s most significant growth sector: interactive streaming.
As any songwriter looking at his or her royalty statement knows, current interactive streaming rates—set over ten years ago when digital streaming was just beginning—pay very little to song creators. These low royalty rates have immensely benefited large digital companies who have built thriving music services used to deliver your songs and to draw consumers into their larger “ecosystems.” While royalties paid to songwriters have remained small, giant tech companies have used your songs to sell not just music subscriptions, but also other products and services such as the Amazon Echo and Google Home devices, iPhones, Beats headphones and Amazon Prime subscriptions.
More problematic, the current mechanical royalty rates have allowed Spotify to continue to offer a full access music service that is free to consumers. This means Spotify can make all of your songs available while charging consumers nothing and paying you (almost) nothing.
Even former Pandora CEO Brian McAndrews agrees this is unacceptable. He recently wrote, “Free-to-the-listener on-demand services are driving down music’s intrinsic value by creating a ‘gray-market’… An ever-growing number of listeners are happily lingering in music’s gray market, enjoying full access to all music without paying for the privilege and with little incentive or intention to convert to a full-paying subscription.”
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.
And so the question becomes, “what is fair?” True fairness is a songwriter being paid each time his or her song is played or each time a user purchases a subscription. We have the technology to do this—and anything less degrades the value of what you have created. A fair rate must also take into account the benefits songwriters have provided—through the music they create—to the growth of a tech company’s larger business. If Amazon is using your music to sell Echos or Amazon Prime subscriptions, it should be required to share with you the benefits received.
NMPA is working on your behalf to achieve better, fairer royalty rates for all songwriters and music publishers. Our proposal asks the CRB to adopt a structure that recognizes 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.
We believe that your songs are worth more, and beginning Wednesday, March 8, we will be making that argument before the CRB. This is our only chance for the next five years to bring the royalty rates you are paid in line with the value your songs bring to interactive streaming services.
Your music publisher and NMPA have your back. But we need your help and your voice to stand up to the giant digital companies who don’t.
Copyright holders Copyright Royalty Board Music Publisher Music Streaming Music Streaming Market Nashville Songwriters Association International National Music Publisher’s Association NMPA NSAI Songwriters Wage War