Music publishers and streaming services reach agreement for new royalty rate in the US
Following a well-publicised legal battle over streaming rates that started back in 2018, a major announcement was delivered yesterday – Wednesday, August 31st. The National Music Publishers Association, the Nashville Songwriters Association International and the Digital Media Association announced a settlement with streaming services that established a mechanical streaming rate of 15.35% in America for 2023-2027.
The announcement has surprised everyone, as the NMPA publicly said it would push for a 20% rate for that upcoming four-year period. However, per a report in Variety, sources revealed that concessions were made on both sides. These concessions presumably came in the form of modifications that extend beyond the headline rate.
Sources also told the publication that both sides were keen to avoid another protracted and expensive legal battle, as the 2018-2022 battle cost millions of dollars in legal and other fees.
Specifics were not provided, but according to the announcement, the new deal includes a set of changes to other components of the new rate, including an increase to the per-subscriber minimums and the “Total Content Costs (TCC)” calculations which reflect the rates that services pay to record labels. The agreement modernises the treatment of “bundles” of products from services that include music streaming and updates how services can offer incentives to attract new subscribers.
It has been presumed that these concessions make up some of the difference between the settled 15.35% and 20% increase. The reasoning is that they alter the numbers upon which the payments are calculated. For instance, the bundles address the lower subscription costs for students and family plans on streaming services. It has been suggested that they were updated in a way that publishing houses feel is more equitable.
The announcement reads: “This agreement, supported by DiMA member companies, Amazon, Apple, Google, Pandora, and Spotify, as well as NSAI’s Board of Directors, and the NMPA Board, which is comprised of leading independent and major music publishers, ensures that all parties will benefit from the growth of the industry and will be motivated to work together to maximise that growth”.
NMPA President & CEO David Israelite explained, “This historic settlement is the result of songwriters making their voices heard. Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed. We thank the digital services for coming to the table and treating creators as business partners. Critically, since this is a percentage rate, we know that as streaming continues to grow exponentially, we will see unprecedented value of songs.”
Never Miss A Beat
The Far Out Music Newsletter
All the latest music news from the independent voice of culture.
Straight to your inbox.