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Music publishers worldwide follow mechanical rate proceedings in US

By | Published on Thursday 9 March 2017

US Congress

America’s Copyright Royalty Board yesterday got around to thinking about what the country’s mechanical royalty rates should be for the next five years. And to confirm that the worldwide music community was watching the process, the International Confederation Of Music Publishers vocalised its support for the US music publishing sector’s bid to get the rates up.

Mechanical royalties – paid to songwriters when recordings of their songs are copied and distributed – are covered by a compulsory licence Stateside. Which means songwriters and music publishers are obliged to license third parties making and distributing those copies at a statutory rate, so that rate-setting processes like this one are rather important.

Traditionally the main customers of mechanical rights have been record companies, which need a license from the relevant songwriter or music publisher every time they press a CD.

In the US, unlike in Europe, it was the label which paid the mechanical royalties on downloads too, so that iTunes didn’t have to worry about making sure the owner of the song copyright was paid their share of any income.

However with streams, where both the mechanical and performing rights of the copyright are exploited, it is the digital platform that is the licensee and which therefore pays the mechanical royalties directly to the writer or publisher (or not as the case may be, as those songwriter lawsuits against various streaming services have demonstrated).

Discs and downloads also remain a decent part of the recorded music business for now of course, but – after a bit of a stand off – the US record industry reached a deal with the music publishers on mechanical royalty rates last year. Which means that the CRB hearing is very much focused on the rates paid by the streaming services, which are, after all, where all the growth is in recorded music these days.

Unsurprisingly, the digital platforms want to keep their royalty obligations down, while the songwriters and publishers want to push things up, or at least secure certain minimum guarantees over and above revenue share arrangements.

The National Music Publishers’ Association and Nashville Songwriters Association International are fighting the music community’s side in this battle, and earlier this week the former urged songwriters to put their name to an open letter to the tech giants and big streaming platforms; chiefly Apple, Amazon, Google, Spotify and Pandora.

Addressing those firms, the open letter says: “As songwriters, we count on you to deliver our music to the fans who love it. We appreciate the innovative platforms you have developed to do this, however we must voice our outrage at the way you are devaluing our work in the process”.

It goes on: “Currently you are fighting to pay us as little as possible in the Copyright Royalty Board proceedings. This is alarming not only because it threatens our livelihoods and ability to continue our craft, but also because it tells us that instead of being our business partners, you choose to be our adversaries”.

Arguing that the tech sector’s bid to push down songwriter royalties will ultimately mean “that you have nothing left to deliver the fans who subscribe to your services”, the letter concludes: “It’s not too late to do the right thing. Stop litigating against songwriters and pay them a fair rate for their songs. It is in your best interest to do so instead of making it impossible for us to earn a living. The future of music, and your business, depends on it”.

Although very much a battle resulting from the specifics of American copyright law, songwriters and publishers worldwide are taking an interested in the CRB proceedings, because the US is such a key market for recorded music.

To that end the Director General of the globally focused ICMP, Coco Carmona, said yesterday: “As streaming’s popularity has grown dramatically in recent years, this rate setting procedure is crucial for rightsholders. Songwriters are up against more obstacles than ever to make a living so fairer royalty rates would make a huge difference to their livelihoods”.

The CRB hearing kicked off yesterday, though they have until December to actually determine the mechanical royalty rates that will then be in place for the next five years.