Warner Chappell Music co-heads Guy Moot and Carianne Marshall addressed the Copyright Royalty Board’s (CRB) ongoing mechanical royalty rate proceedings in a letter that was sent to the publisher’s U.S. songwriters on Monday (Feb. 7).
The proceedings in question, presided over by three CRB judges, will determine the mechanical royalty rates music streaming services pay songwriters and publishers for the term known as Phonorecords IV, spanning the years 2023-2027.
In the letter, which was obtained by Billboard, Moot and Marshall say the forthcoming rate determination amounts to “a critical moment” for songwriters that will create a “ripple effect” which could carry over into other negotiations between the CRB and streaming services, as well as royalty rates paid in future terms. They encourage WCM songwriters to “raise awareness and help spread the word throughout the broader songwriting community” as the CRB proceedings forge ahead over the next several months.
As the WCM co-heads note, the National Music Publishers Association (NMPA), the Nashville Songwriters Association International (NSAI) and Songwriters of North America (SONA) are all advocating for a mechanical royalty rate increase to 20% of service revenue for songwriters for Phono IV.
In March 2019, Spotify, Amazon, Google and Pandora appealed the CRB’s rate determination for Phonorecords III (2018-2022), which saw the organization increase mechanical royalty rates for songwriters roughly a percentage point every year during the term, from 11.4% in 2018 to 15.1% in 2022. While the appeal is in process, those streaming services are still paying the 10.5% rate set by the CRB for the year 2017 and proposing a return to that rate for Phono IV.
“That’s an appallingly low rate,” write Moot and Marshall. “And now, some of the biggest and most valuable companies in the world are pushing to extend that 10.5% rate for the next five-year period.”
They continue, “Many of you rely on songwriting as your primary source of income, and we’re doing everything in our power to achieve a positive outcome. Without songwriters, we wouldn’t have songs or streaming services – there’d be no music business at all. You deserve this pay raise and more.”
You can read the full letter below.
To our Warner Chappell songwriting family,
As your partners and your champions, we wanted to let you know about a crucial fight that will determine what you make from streaming both now and in the years to come.
In the U.S., there’s a portion of your revenue from streaming services (such as Spotify, Apple and Amazon) – mechanical revenue – that’s determined every five years by three judges who make up the Copyright Royalty Board (CRB) in Washington, D.C.
By early next year, in a proceeding known as Phono IV, the CRB will determine the mechanical royalty rates that streaming services will pay music publishers and songwriters between 2023 and 2027.
This is a critical moment. Not only will the CRB decide the future mechanical royalty rates for streaming, there’s also a “ripple effect,” where the CRB’s decision can influence other negotiations with streaming services, as well as future rates.
To break things down even more, these tech companies currently should be paying you 15.1% – the rate that was set by the CRB for 2022, in the last CRB proceeding called Phono III. But instead, Spotify, Amazon, Google and Pandora have spent more than four years appealing that ruling. While the appeal plays out, they’re still paying the rate set by the CRB for 2017 – just 10.5%. That’s an appallingly low rate. And now, some of the biggest and most valuable companies in the world are pushing to extend that 10.5% rate for the next five-year period.
On behalf of all songwriters, music publishers and other trade associations, the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI) and Songwriters of North America (SONA) are advocating for an increase to 20% in Phono IV.
We’ve been actively involved in this rate proceeding with a seat on the NMPA Board and representation on various working groups, alongside our own writers and board members Liz Rose and Ross Golan. Several songwriter witnesses will also testify to the CRB about everything that goes into writing a song and how the streaming services’ efforts to devalue the works of songwriters is potentially devastating.
Many of you rely on songwriting as your primary source of income, and we’re doing everything in our power to achieve a positive outcome. Without songwriters, we wouldn’t have songs or streaming services – there’d be no music business at all. You deserve this pay raise and more.
Over the next few months, we encourage you all to raise awareness around this important issue and help spread the word throughout the broader songwriting community. Your voice matters most in this debate.
We’re hopeful the CRB will make the right determinations that support the best interests of music creators like you. No matter the outcome, we’ll continue to work tirelessly to support and defend your rights and create new opportunities for your songs.
In addition to your A&R team, we’re always available if you have thoughts or questions. You can also follow the NMPA, NSAI and SONA for important updates, and you’ll be hearing from us again soon as we get closer to the next steps in Phono III and Phono IV.
Guy & Carianne
