Spotify, Pandora, Amazon, Google Unilaterally Challenge the CRB’s 44% Songwriter Royalty Increase

The D.C. Court of Appeals, where the showdown begins over mechanical royalty rate increases (photo: AgnosticPreachersKid CC 3.0).
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The D.C. Court of Appeals, where the showdown begins over mechanical royalty rate increases (photo: AgnosticPreachersKid CC 3.0).
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The D.C. Court of Appeals, where the showdown begins over mechanical royalty rate increases (photo: AgnosticPreachersKid CC 3.0).

Last month, National Music Publishers’ Association president David Israelite stated that any challenge to the CRB’s proposed mechanical royalty increases would be ‘declaring war on songwriters‘.

Well, if that’s the case, the enemy assault is coming from Spotify, Amazon, Google, and Pandora — i.e., the largest streaming music players in the world.

“The Copyright Royalty Board (CRB), in a split decision, recently issued the U.S. mechanical statutory rates in a manner that raises serious procedural and substantive concerns,” Spotify, Pandora, and Google emailed Digital Music News in a joint statement.

“If left to stand, the CRB’s decision harms both music licensees and copyright owners. Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision.”

The only big name missing here is Apple Music.  At present, sources have indicated to DMN that a challenge will not be forthcoming from Apple.  In general, Apple has been more supportive of royalty increases and fairer compensation for creators — and its per-play royalties are solidly boosted by Apple Music’s pay-only audience.

Last year, the Copyright Royalty Board (CRB), which determines statutory royalty rates in the United States, called for a mechanical royalty increase of 44% over a four-year term for songwriters and publishers.

The increase was approved by a 2-1 vote (i.e., the ‘split decision’ referred to above).  The CRB’s vote was subsequently approved by the Register of Copyrights in February, opening a one-month window for challenges.

“The Copyright Royalty Board published today the Final Rates and terms for songwriters for mechanical royalties,” a tough-talking Israelite declared roughly one month ago.

“NMPA and NSAI [Nashville Songwriters Association International] fought hard to increase songwriter royalties by 44%+.  The digital music companies now have 30 days to appeal that ruling, and in effect declare war on songwriters.”

The flurry of appeals arrived right on cue — and are hardly unexpected.

All four services separately filed a notice to appeal with the U.S. District Court of Appeals, a precursor to a more detailed appeal.  Though the challenges are directed towards the CRB’s decision, Israelite has accused the streaming giants of ‘suing songwriters’.

“The CRB’s final determination gave songwriters only their second meaningful rate increase in 110 years,” Israelite stated. “Instead of accepting the CRB’s decision which still values songs less than their fair market value, Spotify and Amazon have declared war on the songwriting community by appealing that decision.”

Israelite further noted that the recent victory in passing the Music Modernization Act (MMA) offered hope of  “a new day of improved relations between digital music services and songwriters.”  That has now given way to ‘war,’ with Israelite obviously furious over the challenges.

“No amount of insincere and hollow public relations gestures such as throwing parties or buying billboards of congratulations or naming songwriters ‘geniuses’ can hide the fact that these big tech bullies do not respect or value the songwriters who make their businesses possible,” Israelite fumed.

More as this develops.

10 Responses

  1. Anonymous

    Sound like to me all of these big streaming services are the crooks, except for Apple Music, when it comes to doing the right thing.

    • Knob twiddler

      Apple music is more than likely staying out of the fight because they don’t have to….the others are doing it for them.

      • Paul Resnikoff

        There is the money argument here. Apple can afford to pay more — and saddle their competitors with higher costs. That doesn’t make sense if the competitors are just Amazon and Google/Alphabet – then it’s just a royalty arms race. But with cash-conscious Spotify in the mix, royalties can be used as a very strategic weapon.

        • Dean Hajas

          I have a suggestion to make to the Songwriters, Congress – The CRB – PRO’s – Publishers, lobby the Government to change the Legal term of Streaming, utilizing “Broadcast and Transmission” to define it. These two words are employable and empowering to the PRO’s and the songwriters, in that we will be getting a Performance Royalty for on line streams instead of what’s currently happening. Streaming was deemed a sale, and the CRB were right there determining the fair use by the public, and the pandoras box is harder to put the lid back on when the very organization was defending the Governments right to tax the new record companies who are Bell Rogers Cogeco. Multiply the Cell phone using population of Canada alone, and it’s a $25 Billion dollar industry. Yet the PRO SOCAN is only able to hunt down and remunerate artists at approximately $37.84 per membership of 150,000 members. The CRTC announced last year $36.9 Billion in revenues with half of that being in radio alone. If we multiply $18.4 Billion times the CANCON content ratio, it’s not $275 million shared by SOCAN last year to its writing and performing members. There’s BIG money in the music industry and the controllers of it, have had their day for the last 30 years. It’s time to literally BAND together and demand our fair value. Just look at spread sheets from each quarter of Bell alone…that’s where our cash is, and to show the validity, Ole for instance does licensing deals directly with Bell. Getting paid upfront for the value we add to commerce. That’s my two cents. M. Dean Hajas

      • Anonymous

        Apple has a broader business, and can charge its consumers what it likes. Downloads are nothing compared to their hardware prices, although the latter could affect their ecosystem.

        Spotify, being a money loser, has to do this. Amazon and Google are enemies of creators, and that isn’t news to anyone.

  2. Anonymous

    It is well known that Spotify’s business is Spotify and it’s streaming technologies; not music and certainly not paying creators a fair wage. It is to their benefit as a corporation to keep royalty payouts as low as possible while keeping their corporate salaries as high as possible (notice I don’t say profits – Spotify has only just made a profit for this first time this year). They say they are providing a needed service (which I don’t deny), but then why are they not a benefit corporation? At least Apple Music realizes they wouldn’t have a service if it weren’t for content creators. But frankly, I blame the PRO’s for the situation we’re in almost more than the giant labels or the streaming distributors – and yes, I am a member of a PRO. As soon as music went digital, they should have been out there fighting for their members and working on creating better tracking technologies and lobbying to congress for higher digital payments rather than waiting to see which way the wind would blow. I just wish the average consumer was more well informed about how much of their monthly streaming subscriptions actually went towards paying artists and how much an artist actually gets paid per stream. Bottom line, if Spotify, Amazon, Pandora, Google, and other digital distributors actually paid a fair streaming mechanical royalty rate they probably wouldn’t be able to stay in business – thus the protest…

  3. guest

    Artists and Indie Labels need to stop promoting these streaming services that are basically using your content to fill their wallets. you tell your fans where to listen to music and send them to those services. These Corporations are destroying and are disrupting the lives of many creators , Spotify is not a needed service or a technology its a ripoff scheme. you need to be all going public to your fans with this otherwise nothing will happen and you will continue to work hard for nothing..
    These services would not exist without your music so stop uploading your music to these services, just take down your catalogs.. Music Distributors need to stop being in bed with these services and think about the labels and artists ..
    Use some common sense instead of thinking like you have peabrains.

  4. Anonymous

    I’m not entirely sure the 44% increase is what the services are actually appealing. The CRB ruling is over a hundred pages, and contains numerous changes that don’t appear to have been thought through very well, which actually do create unintentional consequences for services and songwriters. While I don’t know for sure which parts they’re appealing yet, maybe we shouldn’t get out the war drums just yet, and see what the appeal actually says first.

    • Anonymous

      What? A sensible comment on a DMN post? You must be new here…