Ahead of the CRB’s Phonorecords III Determination, Are Streaming Services Preparing for a Major Rate Hike?

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Washington, D.C.’s James Madison Memorial Building, which houses the U.S. Copyright Office.

The Copyright Royalty Board (CRB) could be preparing to issue a major royalty-rate hike for streaming services, which are reportedly looking to delay retroactive payments for the 2018-2022 (Phonorecords III) period.

This rumored rate jump would arrive after a years-running battle between the major publishers and streaming giants including Spotify, Amazon Music, and YouTube Music. (Possibly in an effort to apply pressure to Spotify and other relatively cash-strapped competitors, Apple didn’t appeal the ruling at the center of said battle.)

And that ruling, for its part, is the three-judge Copyright Royalty Board’s 2018 decision, published in early 2019, to increase songwriter royalties (for streaming, not physical and downloads) by 44 percent, to 15 percent of streaming-service revenue for the period spanning 2018-2022.

The aforementioned streaming mainstays (sans Apple Music) promptly appealed the proposed boost, which the CRB had approved in a two-to-one vote. Now, with the royalty-rate confrontation having dragged on for years – and with the involved parties having also turned their attention to the rate determination for 2023-2027, which is slated to begin in 2022 – a ruling is expected “in the coming days,” per Variety.

Concrete details about the ruling are sparse at the moment, but it’s worth noting that the National Music Publishers’ Association (NMPA) has retweeted the Variety piece, appearing to acknowledge the validity of the claims therein.

In any event, the article at hand indicates that a law firm working for the Digital Licensee Coordinator (DLC), a streaming-service representative, kicked off June by seeking to delay (via a letter to USCO officials) platforms’ payment of retroactive royalties for the 2018-2022 period. Naturally, the National Music Publishers’ Association in a letter of its own pushed back against the requested pause, and a bipartisan group of five senators 11 days ago sent Register of Copyrights Shira Perlmutter a different letter yet on the topic.

(Notwithstanding Variety’s report today, IPWatchdog posted the inquiry in its entirety seven days ago.)

Authored by lawmakers including Senators Thom Tillis and Marsha Blackburn, the letter recaps the above-highlighted DLC attempt to halt the backdated royalty payments (following the coming CRB verdict) before making clear the signees’ opposition to any sort of pause.

“We have serious concern[s] about any requests that would delay important and necessary royalty payments to copyright owners and we are opposed to any granting by the Copyright Office of an extension,” the document states.

“The digital companies’ request would prevent songwriters from timely receiving royalties that they may be owed and on which they rely,” the decidedly simple text proceeds. “It would do so without providing those very songwriters an opportunity to publicly comment on the proposed changes or raise their own concerns with the Copyright Office. This type of relief is extraordinary and unwarranted.”

The senators also called for a “formal response” by Saturday, July 16th. And while neither the streaming services nor the NMPA had commented publicly on the matter at the time of this piece’s writing – except for the NMPA’s mentioned retweet, that is – it stands to reason that the effort to pause the retroactive payment could have resulted at least in part from the imminent announcement of a major rate hike.

More as this develops.