Music-streaming services will have to pay more money to the artists whose songs they distribute, following a ruling Saturday by the Copyright Royalty Board that mandates that songwriters will get at least a 15.1% share of music-streaming revenues, up from the previous 10.5%. It is the largest rate increase in the board’s history, according to the National Music Publishers’ Association (NMPA).
The royalty board also lifted a cap on “total content costs,” which are payments to music labels; and removed caps and limitations on songwriters’ compensation rates. In addition, if the total content cost is higher than the songwriter’s compensation, the songwriter will get a higher compensation rate based on the total content cost.
“It’s a good day for songwriters,” said David Israelite, NMPA president. “This is the first time the court has litigated the contribution of songwriters to these digital platforms.”
Music-streaming services, such as Spotify and YouTube, are now the largest source of music-industry sales in the United States and are gaining market dominance worldwide, with a 60% growth in global sales in 2016. But songwriters have long complained that these services offer them too little compensation for their music.
The royalty board’s decision will likely mean that consumers who download music will have to pay more for their music. It received applause from songwriters, however, who had first pushed unsuccessfully to get paid every time a consumer streams one of their songs. Israelite said that last week’s court victory more than makes up for this loss.
The issue first reached the royalty board when the Nashville Songwriters Association (NSAI) and the NMPA squared off in court against Google, Amazon, Apple, Pandora, and Spotify. The trial ran from March-June 2017.