Spotify, Amazon, Pandora, Google/Alphabet File a 92-Page Formal Protest Against Streaming Royalty Rate Increases

The fearsome foursome of Spotify, Alphabet/Google, Amazon, and Pandora aren’t backing down against proposed publishing rate hikes for streaming music services.

Back in March, the streaming music giants first announced their intentions of fighting a major increase in streaming royalty rates for publishers and songwriters. The sizable 44% increase, which applies to streaming mechanical rates in the U.S., was handed down by the Copyright Royalty Board before drawing the sharp rebuke of streaming platforms.

That, in the words of National Music Publishers’ Association (NMPA) president David Israelite, was effectively ‘declaring war’ against 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’s tough talk hasn’t swayed the major streaming services, however.  On Wednesday, the group formally entered a 92-page appeal of the rate increase and shared the filing with Digital Music News (the full document is here).

These are some seriously large companies, and Google and its Alphabet parent count for at least two services, Google Play Music and YouTube.  ‘Amazon Digital Services ‘ includes both Amazon Music Unlimited and Amazon Prime Music, as well as variations (for example, a stripped-down, ad-supported service for Alexa users that is currently rolling out).  Pandora is now owned by Sirius XM Radio, which is no stranger to exchanging barbs with major publishers and the NMPA’s Israelite.

Those groups are all part of the Digital Media Association, or DiMA, which also counts Apple amongst its ranks.  It should be noted, however, that Apple isn’t appealing the decision and views the increases as a healthy change for songwriter and publisher royalty structures.

Immediately after the filing, DiMA CEO Garrett Levin seemed to imply* that royalty rates should be kept at a reasonably low and affordable rate to preserve the growth rate of streaming.

“Streaming has reinvigorated the music industry and represents both the present and future of how fans engage with music whenever and wherever they want and how creators reach old fans and make new ones,” Levin emailed Digital Music News.

“All stakeholders should work to preserve and support the continued, unsurpassed growth that streaming has brought to the industry, and the innovations that have made it possible.”

That statement suggests that paying songwriters and publishers more would stunt the currently-surging growth of platforms like Spotify, which now boasts roughly 110 million paying subscribers. But the filing itself attacks the royalty rate increases on more fundamental legal and logical levels, arguing that the increases are “arbitrary and capricious, unexplained, and unsupported by substantial evidence.”

*Updated, 8/15 3:30 pm PT: DiMA took issue with the earlier version of our article, which made it appear that Levin had stated that lower rates would help to preserve streaming’s aggressive growth rates.  Rather, DMN interpreted Levin’s actual quote (above) to strongly suggest that (his actual quote has remained the same, and is above).

Indeed, the 92-page PDF contains extensive references to earlier decisions, precedents, and statutes, all of which are presented to paint the CRB’s increases as unfounded.  “The [CRB] Majority adopted a rate-setting methodology that is virtually identical to the one this Court has rejected,” the appeal brief declares.  “The Majority here examined multiple expert models, rejected critical elements of each, and then nonetheless used certain inputs and outputs of those models to set the ‘bounds’ of a ‘zone of reasonableness.’

“Then, without explanation, it simply took the midpoint between the two ‘bounds.'”

So, what is the perfect rate-setting resolution?

The answer, according to the appellant group, shouldn’t be the result of the CRB’s earlier, haphazard process. “The Board must carefully examine the relevant expert methodologies, resolve competing arguments about their validity and coherently explain its ultimate rate-setting decision,” the filing continues.

“Simply averaging the difference between proposals the Majority found deficient is a clear violation of the rate-setting process.”

That is just one of numerous arguments advanced to discredit and challenge the CRB’s earlier methodology for increasing mechanical streaming royalty rates.

The complete filing, which contains some redactions, is here.

11 Responses

  1. Anonymous

    Let them file all the papers they want..this system only works for them..stop using these platforms..and things will change…fast..I’ve seen it happen before…its fool-proof.

    • D

      No doubt. Don’t see that happening for awhile with the way pop music and general consumers currently behave though.

  2. Johnny

    Tech companies could give a Rat’s ass about artists and songwriters. They only want MORE MONEY FOR THEMSELVES and less money for the people who do all the work and create the music. Agree, stop using these platforms and encourage fans to do likewise

  3. Anonymous

    Screw those nasty thieves…. Streaming is not the future… it is a temporary way for evil Kunts to make money under the guise of Capitalism that works for no one but the 1 %..

  4. Blobbo

    I don’t understand why major artists are not pulling their tracks from Spotify in protest. Talk about gutless. And Tool just put their music up there. Talk about lousy timing.

    • Jane

      I wondered about this too. At a guess perhaps they have some type of confidentiality clause in their contracts that prevent them from doing anything about this situation.

    • Never Sign

      They Don’t Own Their Masters The Record Company Does. They Have No Rights And Record Companies Do What EVER They Want Like Keep The Lion Share And The Artist Gets Nothing…
      Also As An Independent Musician I Can Account That The Record Companies Have Negotiated On Our Behalf To Be Paid Less Than Signed Acts.
      I Can Also Tell You As An Indie I Have Taken My Music Off The Big Streaming Sites And They Don’t Take Your Music Off The Platform… They Hide It And Keep Streaming!
      It’s Worse They Now Use Dummy Accounts To Hide My Numbers In Hidden Accounts They Think I Don’t See Just Do A Search Check Page 5!
      Also We Now Receive NO NUMBERS On The Sites That Have Kept My Music Up Against My Will!!!
      AND On Sites Ive Allowed To Stream ALL REPORTS Say I Have One Play And Pay One Penny! Not The Fraction It Should Be!
      I Receive No Help From ASCAMP Or BMI.
      The Most Help I Ever Received Was SOME Help From Harry Fox But Even That Is Tenitive.
      Now We Face Major Indi Music Suppression On YouTube Especially Since YouTube Music! Which I REFUSE TO SIGN UP FOR BECAUSE I CAN’T TAKE THIS THEFT!!!
      My Work Despite The Music Industry Sabotage Is Still Growing And Will Happily Sit Back Here In Our Obscurity And Joyfully Watch The Fall Of The Music Industry By Big Bad COMPOUNDING INTEREST Gobble Gobble

      • D

        If you took your music off of somewhere and withdrew rights but they continued to stream your music you can (and should) sue and are entitled to any and all profit made off of that music being streamed, not just the agreed upon royalty rate from them legally streaming your music as part of your partnership. Good luck.

  5. Robert

    I’m trying to recall the name of the artist who recently appeared in court to air his grievance about getting so little for the streaming royalty on his ever-so iconic song. Any recollection about that? Not Ferrel, but someone who had tens of millions of plays and received a thousand dollars.

  6. Black

    Sellouts deserve NOTHING
    That’s why you don’t sellout!!!I