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Songwriters call for full transparency around US song royalty rate settlement deal

By | Published on Wednesday 5 October 2022

Streaming services

The Music Creators North America organisation has called on the US Copyright Royalty Board to make public the agreement reached between the music publishers and the streaming services regarding the rates to be paid by the latter for the streaming of songs in the years ahead. MCNA says that all songwriters need access to an “un-redacted copy of the agreement under consideration in its entirety, including any and all related or potentially related agreements”.

In the US, what royalties are paid by streaming services to music publishers and songwriters is set by a panel of judges known as the Copyright Royalty Board. That’s because there is a compulsory licence covering the mechanical copying of songs under US copyright law. As a result, every few years the CRB decides what percentage of streaming revenues should be allocated to the song rights under that compulsory licence.

There has been much disagreement in recent years over what the basic revenue share allocation should be, as well as over other technicalities contained within the compulsory licence. As the CRB started to consider what rates it should set for the next five years, the music publishers proposed an increase from the current 15.1% to something closer to 20%, while some of the streaming services were proposing something more like 10.5%.

However, in August a deal was done between the publishers – repped by the National Music Publishers Association – and the streaming services, meaning a full costly and time-consuming royalty rate battle before the CRB was avoided.

Under that deal, there will be a very slight increase in the song royalty over the next five years, up to 15.35%. That will keep the US in line with the streaming monies allocated to the song rights elsewhere in the world – actually, in the main it’s slightly more – plus the publishers got some of those technicalities reformed in their favour.

The deal was broadly welcomed across the music publisher and songwriter communities, not least because it meant that the music publishing sector wouldn’t have to spend a whole load of time and money fighting the streaming services in front of the CRB.

However, since the deal was announced, and as formalities at the CRB in relation to the deal have started to go through the motions, some issues have been raised by some songwriters in relation to some aspects of the deal, in particular around transparency.

Among those raising concerns is George Johnson, the songwriter who has been the most proactive individual in recent CRB proceedings, with organisations like the MCNA backing him up.

In a submission to the CRB yesterday, the MCNA writes: “We would like to express our extreme dismay over the joint response dated 26 Sep 2022 filed by the National Music Publishers Association, the Nashville Songwriters Association International and various digital music distributors in opposition to participant George Johnson’s recent motion to compel disclosure of those groups’ unpublished, privately negotiated, proposed streaming rate deal”.

“We are deeply concerned by these recent efforts to shield secret dealings by parties whose interests are potentially in conflict with those of music creators”, it goes on, “and firmly believe that filing a proposal urging the CRB to engage in an action that would be in flagrant violation of the mandatory disclosure, transparency and comment provisions set forth in the US Copyright Act represents a pursuit of highly questionable motivation that should not be permitted to influence CRB policy”.

Noting a filing earlier this week by the NMPA and Google, the letter adds: “Our concerns in this regard are immeasurably heightened by the filing last evening of a joint notice of lodging by NMPA and Google containing admissions that potentially ‘related agreements’ were executed among Google and certain of the music publisher endorsers of the proposed streaming settlement ‘on or around the execution date of the settlement agreement’ which they regard as superfluous and ‘substantively unrelated’ to the proposed agreement for which CRB approval and adoption is being sought”.

The letter then highlights that US copyright law says that those affected by any CRB amendments to royalty rates must be given the opportunity to submit comments on those amendments.

“In order to satisfy the Congressional mandate that affected parties be given opportunity to comment upon private agreements negotiated by participants to the proceedings prior to their adoption or rejection by the CRB”, it continues, “we respectfully urge the CRB to timely publish an un-redacted copy of the agreement under consideration in its entirety, including any and all related or potentially related agreements the existence of some of which are already acknowledged by NMPA and Google”.

That is required, it says, “so that the independent music creator community and all interested and affected parties are afforded the requisite time and complete information necessary to adequately review and evaluate the proposal in whole. That opportunity is a sine qua non [essential condition] to formulating complete and cogent comments for CRB consideration, as mandated by statute”.

It remains to be seen if the big old deal between the publishers and the services – and details of any side deals – are indeed made fully public and, if so, whether there will be any elements of those documents that cause some or all of the songwriting community to change their opinion on the widely welcomed settlement.