Streaming giants Spotify, Amazon, and Pandora have offered much lower streaming royalty rates. According to a Billboard report, on October 21, a number of big names in the streaming industry filed a case with the United States Copyright Royalty Board (CRB), proposing to reduce royalty rates for the period 2023- 2027.
Seek to lower the increased rates
According to news first reported by Consequence of Sound, three of the largest platforms, namely Amazon, Spotify and Pandora, are asking for a significant reduction in royalties from those applicable between 2018-2022.
The proposals are for the next CRB Phonerecords IV (i.e. the fourth pricing period), which is expected to come into effect in 2023. The current period is called Phonerecords III and is interesting in the sense that it has seen an increase compared to the two previous periods (Phonerecords I between 2008-2012 and Phonerecords II from 2013-2017). Royalty rates currently stand at 15.1% of a service’s revenue in the past year.
But these rates are currently under review by an appeals court, although they have not always been put into practice. Take the example of Spotify, which reverted to earlier, lower rates as soon as the case was appealed.
Publishers want higher prices
The proposal comes even as the National Music Publisher’s Association (NMPA) seeks to increase the overall rate to 20% of digital service revenues. To counter this, Amazon, along with Spotify and Pandora, proposed to reduce the rate to around 10.5%, corresponding to pre-2018 levels.
At the same time, Apple Music decided not to follow the trend and wait for the judgment on the call of Phonerecords III. As such, depending on how the decision turns out, Apple could either become a haven for artists and songwriters during the 2023-2027 period, or end up following the same path as other platforms.
The Digital Media Association (DiMA) has come forward to defend the lower rates, saying that to be competitive streamers need “billions of dollars invested in catalogs,” while arguing that a base of listeners growing would also bring in more income. CEO Garrett Levin said the organization believed the “answer” was to “tackle this cognitive dissonance,” instead of rushing to judgments. He added that the main objective should be to “preserve the long-term growth of the industry” while ensuring that as many people as possible benefit from it.