Streaming giants Spotify, Amazon, and Pandora have proposed much lower streaming royalty rates. As per a report by Billboard, October 21 saw a number of streaming industry biggies make a filing to the US Copyright Royalty Board (CRB), proposing to bring down royalty rates for the period between 2023-2027.
Seeking to Bring Down the Increased Rates
As per the news first reported by Consequence of Sound, three of the biggest platforms, namely, Amazon, Spotify, and Pandora, are calling for a significant reduction in the royalties as compared to that applicable between 2018-2022.
The proposals are for the upcoming CRB Phonerecords IV (that is, the fourth period of rate determination), which is set to come into effect in 2023. The current period is referred to as Phonerecords III, and is interesting in the sense that it saw an increase over the previous two periods (Phonerecords I between 2008-2012, and Phonerecords II from 2013-2017). Royalty rates currently stand at 15.1 percent of a service’s revenue in the final year.
But these rates are currently under scrutiny at an Appeals Court, despite not always been put to practical use. Take for example Spotify, which has reverted back to the previous, lower rates, as soon as the case was appealed.
Publishers Want Higher Rates
This proposal comes even as the National Music Publisher’s Association (NMPA) is seeking to increase the headline rate to 20 percent of the revenue of a digital service. To counter this, Amazon, along with Spotify and Pandora, has proposed bringing down the rate to around 10.5 percent, corresponding to pre-2018 levels.
At the same time, Apple Music has decided to not follow the trend, and instead wait for the judgement on the Phonerecords III appeal. As such, depending on which way the ruling turns, Apple might either become a haven for artists and songwriters alike during the period between 2023-2027, or end up going the same way the other platforms are treading.
The Digital Media Association (DiMA) has come forward to defend the lower rates, saying that in order to be competitive, streamers need “billions of dollars invested into catalogs,” while also arguing than a growing listener base would also bring in more revenue. CEO Garrett Levin has said that the organization believes that the “answer lies” in “grappling with this cognitive dissonance,” instead of rushing to judgements. He has added that the main focus should on be on “preserving long-term industry growth” while also making sure that as many people as possible, are benefited.