Warner Chappell Chiefs Draw Battle Lines in Upcoming Streaming Royalty Decision Against Spotify, Google, Amazon and Pandora

As Spotify awkwardly attempts to defend its stance on Joe Rogan — first over the Covid-19 misinformation on his show, and then over his frequent use of the N-word on that same show — the controversies have revived musicians’ longest-standing problem with the platform: The royalty rates it and other streaming platforms pay, which most musicians and many rights-holders feel are far too low.

This is particularly true in publishing: In January of 2018 the Copyright Royalty Board ruled to increase songwriter rates for interactive streaming by nearly 50% over the following five years, to 15.1%. However, in March of 2019, Spotify, Google, Amazon and Pandora then sued to keep the previous rate of 10.5% — and are gearing up to argue for that rate for the next five-year period (2023-2027) as well.

“If left to stand, the CRB’s decision harms both music licensees and copyright owners,” the streaming companies wrote in announcing the appeal. “Accordingly, we are asking the U.S. Court of Appeals for the D.C. Circuit to review the decision.”

The appeal is ongoing, and the four companies are pushing to keep the rate at 10.5% for the next five-year period. Guy Moot and Carianne Marshall, co-chairpeople of Warner Chappell Music, one of the largest publishing companies in the world, have written a letter to their writers laying out the situation from their perspective. The letter, obtained by Variety, follows in full.

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

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