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Music publishers and the top streaming services have reached an agreement on royalty rates for song owners, effectively avoiding another lengthy and messy legal battle between the parties until at least 2027.
Under the agreement, announced Wednesday by the National Music Publishers’ Association, the Nashville Songwriters Association International, and the Digital Media Association — the latter of which represents Amazon Music, Apple Music, YouTube, Pandora, and Spotify — song owners in the U.S. will receive a headline royalty rate of 15.35 percent. The new rate, which will be phased in over the next five years, represents a .25 percent increase from the previous rate, 15.1 percent, which was reached incrementally between 2018 to 2022.
Streamers and publishers also agreed to increases to per-subscriber minimums and “total content costs” calculations, which are reflected in the specific rates that the music streaming services pay to record labels. The agreement also changes the way the parties approach streaming bundles and “updates how services can offer incentives to attract new subscribers into the music ecosystem,” according to Wednesday’s announcement.
The proposal will now be submitted to the Copyright Royalty Board for review.
“Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed,” NMPA President and CEO David Israelite said in a statement. “We thank the digital services for coming to the table and treating creators as business partners.”
Streamers like Spotify, Amazon Music and Google’s YouTube last waged a legal battle with music publishers over royalty rates for the 2018–2022 period, when the CRB — a three-judge panel — determined that digital streamers should pay song owners 15.1 percent of their revenue for royalties. The streamers fought back and initially won an appeal with the D.C. Circuit Court of Appeals, but the CRB ultimately upheld its decision to set the royalty rate for the 2018-2022 period at 15.1 percent.
Heading into the next negotiation period for the 2023-2027 rates, the NMPA previously signaled it would advocate for a 20 percent royalty rate, but it appears the music publishers and streamers landed on a much smaller increase in an effort to avoid another legal battle and lock in the rate.
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