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Appeals court orders Copyright Royalty Board to reconsider some of its decision on streaming rates

By | Published on Monday 10 August 2020


If the online #brokenrecord conversation that put the spotlight back on the streaming music business model as the COVID shutdown hit the live income of many artists was hors d’oeuvres; and the Keep Music Alive campaign from the Musicians’ Union and Ivors Academy calling for government intervention on that model was the soup course; and the artist backlash to Spotify boss Daniel Ek’s recent interview with MusicAlly the fish course; well, the main course could be on its way.

An appeals court in Washington is sending back to the US Copyright Royalty Board the decision that increased the royalty paid to songwriters by streaming services under the compulsory licence that covers the mechanical copying of songs Stateside.

That follows the super controversial decision of various streaming services, including Spotify, to appeal the CRB’s original ruling. That appeal went ahead even though the overall increase in what is paid to songwriters and music publishers by the streaming services pretty much brings the US compulsory licence in line with what has happened in the open marketplace in other countries.

For its part, Spotify insists that – despite objecting to the royalty hike in various hearings that preceded the CRB’s ruling – it isn’t actually opposed to that increase in principle. Rather it, and the other streaming services who appealed, have issues with some of the technicalities in the revised compulsory licence, and also the process the CRB went through in reaching its conclusions.

Once the streaming services had appealed, the music publishers also raised some issues from their side with the CRB’s ruling. Which means – while most people in the music community would have preferred the CRB’s original judgement to stand – any new hearing could also address the issues songwriters and music publishers have raised.

However, for now, we don’t actually know which elements of the CRB ruling the DC Circuit appeals court has issues with. All it said on Friday was that that ruling had been “affirmed in part” and “vacated in part”, and that parts would be “remanded to the board for further proceedings, in accordance with the opinion of the court filed herein this date”. The there cited opinion has not yet been made public.

The music publishing sector and songwriter community has been extremely critical of the streaming services involved in the appeal, and especially Spotify.

Some of the industry’s lobbyists also feel betrayed, because they collaborated closely with those services on the US Music Modernization Act, which addresses some of the issues with the administration of the compulsory licence, reducing the risk of streaming companies getting sued over unpaid royalties.

After all that collaboration, the services then went to court to try to reduce the rates paid under the now-easier-to-administrate compulsory licence.

To what extent the re-run of the CRB’s deliberations will cause controversy depends to an extent on which elements of its previous decision the appeal judges want reconsidered.

But, with parts of the artist and songwriter communities already very vocal with a plethora of criticisms against streaming in general and Spotify in particular – some of those criticisms more justified than others – arguments presented to the CRB this time round will be much more widely scrutinised.

And that could create plenty of PR headaches for Spotify et al.