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The National Music Publishers’ Association’s (NMPA) model TikTok license, which is used by a number of the independent music publishers, will expire at the end of April, and there are no ongoing negotiations between the NMPA and TikTok to renew it.
That means that starting May 1, more songs will be removed from TikTok, joining the millions that have already been removed from the Universal Music Group’s catalog earlier this year. At the end of January, licensing negotiations between UMG and TikTok collapsed, resulting in UMG’s decision to pull its music off the platform. In an open letter sent to artists and songwriters, the company lamented that TikTok failed to pay the “fair value” for music. It also noted other concerns with the platform, including AI concerns and artist safety. TikTok replied within hours, calling UMG’s letter a “false narrative” and that it was “sad and disappointing that [UMG] has put their own greed above the interests of their artists and songwriters.”
It is unclear how widespread the impact of the NMPA’s lapsed license will be. A TikTok spokesperson claims that only a small percentage of its overall music library used the model license and that they are not sure TikTok users will even notice the removals. The spokesperson adds that TikTok is in talks with a number of the publishers who used the NMPA license about getting an individual license, including a few of the larger players that use the NMPA model license. TikTok declined to provide further details.
The NMPA is also tight-lipped about the size of this impact, given the decision of whether or not to individually renew TikTok licenses for May 1 is in the hands of its members, not the NMPA. While the NMPA cannot disclose which independent music publishers use its model license for TikTok, it appears that it is a popular option, used by a large number of firms, ranging from tiny boutiques to sizable independents. The major publishers and some large indies negotiate directly with TikTok already, but the NMPA’s TikTok model license exists as a service largely to help the smaller publishers who would have less negotiating power or resources to get the license on their own.
The NMPA also has model licenses with the other social media networks available to its members, including YouTube, Meta and others, and the organization says it will continue to offer these other model licenses to members. X, notably, is absent from this list because it does not pay for music that appears on its platform. The NMPA has been asking X to license and pay for music for years to no avail, leading the trade organization to launch a $250 million lawsuit against X in June 2023.
The NMPA’s decision to pull out of TikTok should come as little surprise. NMPA president and CEO David Israelite has been supportive of UMG, and its publishing company and NMPA member UMPG, and its choice to leave TikTok since the beginning. Right after UMG announced its exit, Israelite offered a statement, saying “it is extremely unfortunate that TikTok does not seem to value the music creators that fuel its business.”
On Feb. 2, Israelite gave a speech at the Association of Independent Music Publishers Grammy week event, announcing that the NMPA’s license was set to expire at the end of April. “I’m only going to say two things about TikTok: the first is I think music is tremendously important to the business model of TikTok, and, secondly, I am just stating the fact that the NMPA model license, which many of you are using, with TikTok expires in April,” he said at the time.
On March 5, the organization sent a letter to its members, explaining that the NMPA did not foresee renewing its license with TikTok and told members using their model license to negotiate directly with TikTok if they wanted to continue to be on the platform. Since then, the organization has not returned to the negotiating table with TikTok.
In a statement, TikTok said, “We have direct deals in place with thousands of music publishers — including NMPA members — and we will continue to engage with the entire publishing industry to help make their songs available on TikTok.”
The National Music Publishers’ Association’s SONGS foundation has announced its latest board of directors, including both songwriters and publishing executives.
The SONGS (Supporting Our Next Generation of Songwriters) Foundation was founded by the publishing trade organization in 2015 as a way to support aspiring songwriters, offering scholarships and direct financial assistance to help kickstart their careers in addition to other partnerships. With the new board, the foundation announces that it will be centering its focus in the coming year on helping songwriters with mental health, wellness and financial advisory services.
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Artist and songwriter Jewel will be returning to the board this year. She will be joined by fellow songwriters and new members Justin Paul and Benj Pasek (Kobalt), Dan Wilson (UMPG), Lauren Christy (Reservoir), Allison Russell (Concord), Jordan Reynolds (Warner Chappell), Gaby Moreno (peermusic) and CAM (Sony Music Publishing).
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The executives joining the board include some of the biggest names in the publishing business, some of which are already part of the NMPA‘s board of directors. Those include Sony Music Publishing chairman/CEO Jon Platt, Warner Chappell Music co-chair/COO Carianne Marshall, Reservoir founder/CEO Golnar Khosrowshahi, peermusic president/COO Kathy Spanberger, BMG executive vp/general counsel Keith Hauprich, Concord chief publishing officer Jim Selby, Kobalt head of creative Alison Donald, and Universal Music Publishing Group executive vp/co-head of A&R Jennifer Knoepfle. The NMPA’s leadership team of president/CEO David Israelite, executive vp/general counsel Danielle Aguirre and senior vp of external affairs Charlotte Sellmyer will retain their seats on the board.
“We are thrilled to bring together this level of talent, experience and insight onto one board for the sole purpose of helping songwriters,” said Israelite, who is also the president of the SONGS Foundation, in a statement. “The foundation has achieved a great deal, but there is so much more we can and will do for creators with the guidance of this unparalleled group.”
The board will officially launch during its annual fundraising golf tournament in Los Angeles on April 15.
On Mar. 6, the Digital Media Association’s (DiMA) new president/CEO, Graham Davies, published a blog post calling the five-year anniversary of the Music Modernization Act (MMA) a “key moment to course-correct” in a blog post about the Mechanical Licensing Collective. In the process, he suggested the organization has “gone beyond its remit” in collecting and administering the blanket mechanical license in the United States.
On Monday (Mar. 18), the National Music Publishing Association (NMPA) responded to the letter in an email sent to members, in which it said DiMA’s “calls for change” were not “a good faith effort to make the MLC more effective and transparent.”
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So why are the two organizations sparring now?
According to the MMA, the MLC — which serves as the collector and administrator of the blanket mechanical license in the United States — is reviewed every five years by the Copyright Office in a process called “re-designation.” This process will be a routine occurrence moving forward to ensure efficiency, effectiveness and neutrality for the organization.
Now, with the MLC’s first-ever re-designation currently underway, both its critics and supporters have become more vocal in hopes of swaying the results and/or public opinion about the organization’s operations to date.
DiMA’s blog post begins by saying it “remains committed to the success of the MMA and the mechanical licensing collective it established.” Later, the letter focuses on the fact that its membership, which includes the world’s biggest streaming services, is required by the MMA to foot the bill for the MLC. While in the letter it does not ask for this arrangement to be changed, the organization does point out that it feels this system has led to a lack of incentive for the MLC to be cost-conscious, neutral and efficient.
“Reasonable costs of the collective cannot include everything from traveling to distant countries to conduct outreach to songwriters far beyond the U.S. licensing system,” writes Davies. The DiMA CEO/president, who assumed the role in January of this year, also points out that the MLC is “suing one of the licensees [Pandora] that pays its costs — using licensee money to pursue its allegations against a licensee on a novel legal theory.”
The NMPA’s reply, titled “DiMA using copyright office MMA review as opportunity to re-write history and undermine MLC’s progress,” focuses first on re-explaining to its members the history of the MMA and the MLC and the nature of the MLC’s duties before getting into its reply to DiMA. It has a far more favorable take on the MLC overall, claiming the organization “is currently the most efficient, transparent, and cost-effective licensing collective in the world.”
The NMPA goes on to say that streamers “do not want what is in the best interests of music publishers or songwriters,” calling DiMA’s “new…strategy” “an effort by the world’s largest digital companies to leverage their power to pay less, make it easier for non-compliance, and make it more difficult for the MLC to execute its statutory responsibilities as envisioned by Congress.”
“Make no mistake, when big tech says ‘course correct’ they mean a change to the carefully negotiated law to fund only MLC activities that benefit digital companies,” the letter continues.
DiMA’s blog post can be read here. The NMPA’s reply can be read in full below.
MMA Five Years On
It’s astounding how much progress can happen in five years. In 2018, the Music Modernization Act (MMA) became law, creating the Mechanical Licensing Collective (MLC) and fundamentally changing how songwriters and music publishers are licensed and paid by digital streaming services.
Since 2018, the MLC has done a great job building a rights organization that today represents thousands of rightsholders, administers over fifty blanket licenses and has distributed over $1.5 billion in royalties.
The MLC Review
Under the MMA, the Copyright Office reviews every five years its initial designation of the MLC, with the first review starting this past January.
DiMA, the trade association representing the five largest digital music companies—Spotify, Apple, Amazon, Google and Pandora (DSPs)—recently released a blog about the review process.
In it, DiMA called for radical changes that would upend the purpose of the MMA and the MLC under the guise of a “course correction” and a focus on MLC “neutrality.” Reflection at this pivotal point is necessary. But what’s clear is the digital services’ calls for change are not a good faith effort to make the MLC more effective and transparent, as they argue, but the opposite. It is time to set the record straight.
MMA History Refresher
It is important to remember that DiMA and the DSPs were significantly involved in the drafting of the MMA, which reflected the culmination of years of negotiation and consensus building among songwriters, music publishers, and digital music services.
The central compromise of the MMA was the creation of a new mechanical licensing collective to administer Section 115 streaming blanket licenses, governed by rightsholders, and funded by DSPs. The agreement to fund the MLC’s operations was made in exchange for the MLC taking on what had been the DSPs’ royalty administration responsibilities and the DSPs’ securing limited liability for hundreds of millions in statutory damages exposure due to their prior failures to properly license and distribute royalties.
The MLC’s Fundamental Role & Responsibilities
The MMA placed upon the MLC expansive responsibilities under Section 115. In addition to administering licenses and distributing royalties, the MMA provides explicitly that the MLC must handle non-compliance of DSPs through legal enforcement efforts, default of licenses and collection of late fees. It requires the MLC to audit DSPs to ensure proper royalty payments and accounting. These critical rights were traditionally held by copyright owners. However, the MMA took these legal rights from rightsholders and gave this authority to the MLC alone to act on their behalf.
Further, the law empowers the MLC to initiate proceedings before the CRB to set its funding and before the Copyright Office in rulemaking and regulatory processes on behalf of copyright owners. The MLC can also negotiate against DSPs and on behalf of rightsholders non-precedential interim royalty rates for new service offerings under the blanket license.
The MLC’s Success
By any metric, the MLC has been successful in meeting the MMA’s broad directive. After only five years, it is administering over 50 interactive streaming licenses and distributing billions in royalties to thousands of rightsholders. It has heeded the calls of the MMA and the U.S. Copyright Office to focus on outreach to all copyright owners, from the smallest self-published songwriters to the largest music publishers, and domestic and foreign organizations that exploit musical works in the U.S. It maintains a fully public database. And yes, it just announced the start of DMP audits and has used its legal enforcement authority where necessary to ensure compliance, such as the recent Pandora litigation.
It has succeeded in doing all of this with the lowest operating budget of any license administration collective. The MLC is still developing its capabilities, and the next five years will see it continue to grow and improve, but it is currently the most efficient, transparent, and cost-effective licensing collective in the world.
The DSPs’ Vision
Back in 2019, as industry participants sat down to develop the new MLC, it was clear that while the DSPs wanted the benefit of a blanket license and limited liability, they did not want to fund an effective MLC that could accomplish everything statutorily required of it. One DMP executive suggested that the MLC could be just several employees at a WeWork.
Thankfully, the music publishers and songwriters that supported and created the MLC understood—and convinced the DSPs at that time—that to develop a collective that fulfilled the mandate of the MMA and addressed the significant issues of the past, the MLC needed reasonable funding equal to its broad statutory responsibilities.
In their latest calls for a “course correction” and MLC “neutrality,” however, the DSPs and DiMA are once again trying to undermine the MLC and the central compromise to which they agreed.
Make no mistake, when big tech says “course correct” they mean a change to the carefully negotiated law to fund only MLC activities that benefit digital companies.
When they speak of “neutrality,” what they want is to “neuter” the ability of the MLC to accomplish the clear responsibilities set out for it in the MMA. Those responsibilities include being an effective administrator of the compulsory license, being a diligent enforcer of DSP reporting and royalty obligations, and being a strong defender of the rights that the MLC is charged with licensing on behalf of music publishers and songwriters. It should come as no surprise that MLC neutrality vis-à-vis DSPs, either explicitly or in spirit, is not found anywhere in the MMA.
In Short
DSPs do not want what is in the best interests of music publishers or songwriters. Instead, this new DSP/DiMA strategy is an effort by the world’s largest digital companies to leverage their power to pay less, make it easier for non-compliance, and make it more difficult for the MLC to execute its statutory responsibilities as envisioned by Congress.
Their strategy will disempower rightsholders by disempowering the only entity created and authorized to act on their behalf with respect to mechanical licenses – the MLC.
As we look to the next five years, know that the NMPA will continue to be laser focused on fulfilling the clear goals of the MMA and ensuring the MLC is empowered to effectively work for us all.
As always, NMPA president David Israelite kicked off its annual Grammy week showcase (in partnership with Billboard) with a gentle reminder: The bar will close during performances, and guests are expected to remain silent.It’s all part of the NMPA’s ethos to better support songwriters, and throughout the night, attendees also had the pleasure of watching songwriters support one another. At one table sat Jack Antonoff, Lana Del Rey and Kelsea Ballerini. Jelly Roll, Lainey Wilson and hit songwriter Jessie Jo Dillon were seated to their right, with Dan Nigro and Chappell Roan seated just behind and Leon Thomas and his mother nearby.
Throughout the intimate and star-studded evening on Wednesday (Jan. 31), the audience was treated to performances by best new artist nominees Jelly Roll and Noah Kahan, rising pop star Conan Gray and country star Kelsea Ballerini — plus an impassioned speech from Del Rey about Vanguard Award recipient Antonoff, during which she couldn’t help but announce her upcoming country album Lasso, out this September.
Kahan, who was being honored with the Rising Star award, joked before his set that “I’ve been around longer than this [award title] would suggest … Don’t tell the Grammys.” Later, Nigro contested his own award title, saying, “I don’t consider myself a hitmaker” — though his track record on the charts proves otherwise.
Dillon — who is Grammy nominated for songwriter of the year alongside Edgar Barrera, Shane McAnally, Justin Tranter and Theron Thomas — summarized the evening best while accepting her Breakthrough Songwriter award. “There is no music without songs and no songs without songwriters — and we deserve to be compensated fairly.”
As for each performer, they all shared a similar sentiment about the life-changing power of a hit — and how they would never have gotten there where they are today without their incredible and trusted co-writers.
“Our community is really interesting and there’s a lot of anxiety sometimes,” shared Antonoff during the night’s final speech. “I feel very very proud to be here.”
Lana Del Rey
Image Credit: Nick Agrò for NMPA
Lana Del Rey speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jelly Roll
Image Credit: Nick Agrò for NMPA
Jelly Roll performs at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jack Antonoff
Image Credit: Nick Agrò for NMPA
Jack Antonoff speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Chase Stokes & Kelsea Ballerini
Image Credit: Nick Agrò for NMPA
Chase Stokes and Kelsea Ballerini at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
David Israelite
Image Credit: Nick Agrò for NMPA
David Israelite speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Leon Thomas
Image Credit: Nick Agrò for NMPA
Leon Thomas attends the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Lainey Wilson & David Israelite
Image Credit: Nick Agrò for NMPA
Lainey Wilson and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Conan Gray
Image Credit: Nick Agrò for NMPA
Conan Gray performs at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Leon Thomas
Image Credit: Nick Agrò for NMPA
Leon Thomas speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Noah Kahan & David Israelite
Image Credit: Nick Agrò for NMPA
Noah Kahan and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Kelsea Ballerini
Image Credit: Nick Agrò for NMPA
Kelsea Ballerini performs at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Lana Del Rey
Image Credit: Nick Agrò for NMPA
Lana Del Rey at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Conan Gray & David Israelite
Image Credit: Nick Agrò for NMPA
Conan Gray and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Kelsea Ballerini
Image Credit: Nick Agrò for NMPA
Kelsea Ballerini speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jelly Roll
Image Credit: Nick Agrò for NMPA
Jelly Roll at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jessie Jo Dillon
Image Credit: Nick Agro for NMPA
Jessie Jo Dillon speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jack Antonoff & David Israelite
Image Credit: Nick Agrò for NMPA
Jack Antonoff and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Dan Nigro
Image Credit: Nick Agrò for NMPA
Dan Nigro speaks onstage at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Kelsea Ballerini & Jessie Jo Dillon
Image Credit: Nick Agro for NMPA
Kelsea Ballerini and Jessie Jo Dillon at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Golnar Khosrowshahi
Image Credit: Nick Agrò for NMPA
Golnar Khosrowshahi and guest at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Dan Nigro & David Israelite
Image Credit: Nick Agrò for NMPA
Dan Nigro and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Mike O’Neill, Elizabeth Matthews & David Israelite
Image Credit: Nick Agrò for NMPA
Mike O’Neill, Elizabeth Matthews and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Chase Stokes & Kelsea Ballerini
Image Credit: Nick Agrò for NMPA
Chase Stokes and Kelsea Ballerini at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Jelly Roll & David Israelite
Image Credit: Nick Agrò for NMPA
Jelly Roll and David Israelite at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
Mitch Glazier
Image Credit: Nick Agrò for NMPA
Mitch Glazier and guest at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
David Israelite & Kelsea Ballerini
Image Credit: Nick Agrò for NMPA
David Israelite and Kelsea Ballerini at the NMPA + Billboard Grammy Week Showcase at EDEN Sunset in Los Angeles, CA on January 31, 2024.
The National Music Publishers’ Association (NMPA) has hired Chris Barkley as its senior vice president of government affairs. The NMPA’s new hire has two decades of experience working on Capitol Hill, including roles in the House of Representatives and the Senate. Most recently, Barkley served as deputy chief of staff for policy for Sen. Mitt […]
During the National Music Publishers’ Association (NMPA) annual meeting on Wednesday (June 14), the trade organization said it calculated total U.S. publishing revenue at $5.6 billion in 2022, up from $4.7 billion in 2021 — a more than 19% increase year over year.
During his presentation at the meeting, held at Alice Tully Hall at Lincoln Center in New York, NMPA president/CEO David Israelite further noted that $5.6 billion figure does not include monies likely owed to publishers after the Copyright Royalty Board’s recent ruling upholding a rate increase for streaming services, rising gradually from 11.4% to 15.1% of service revenue for the 2018-2022 period. Once that increase is retroactively applied later this year, publishers’ should see a substantial additional payday.
Based on revenues earned in January and February 2023, compared to the same two months from 2022, Israelite said publishing earnings are up 27% so far this year. That’s due to a number of factors, including an increased royalty rate from streaming services that’s now set at 15.1% of revenue in 2023 and will increase gradually to 15.35% in 2027. Streaming services raising their subscription prices have also contributed to higher revenues, as well as growing diversity in publishers’ revenue streams.
Since 2014, when U.S. publishers earned $2.2 billion, annual revenues have grown more than 160% overall, according to the NMPA.
Breaking down revenue categories, performance royalties made up 48% of revenue — dropping below 50% for the first time. That fall in percentage, however, was “because the growth in other categories has been so significant, specifically with regard to synchronization,” Israelite said. Synch revenues made up 26.07% of earnings, mechanical 20.27% and other 5.37%.
Elsewhere during the event, NMPA executive vp/general counsel Danielle Aguirre announced that the organization had also distributed $66 million to its members from legal recoveries and settlements last year. “This is equal to a 456% average return on your dues,” she said, adding that the amount collected brings the NMPA’s all-time legal recovery number to $1.2 billion.
In a blockbuster announcement, Aguirre also revealed that NMPA members were suing Twitter over allegations of widespread copyright infringement, with dozens of music publishers seeking hundreds of millions in damages for infringing over 1,700 songs. If the claims are proven, the social media giant could be forced to pay as much as $255 million in damages.
Apart from Israelite’s state of the union address, which provided publishers with key analysis on the successes and pitfalls of the previous year, the meeting also doled out awards to several individuals. Among them, the organization honored RIAA chairman/CEO Mitch Glazier with the NMPA Industry Legacy Award, Senator Dick Durbin of Illinois with the NMPA President’s Award for his leadership in passing the Music Modernization Act and the CASE Act, Brandi Carlile with the Songwriter Icon Award and Ashley Gorley with the first-ever NMPA Non-Performing Songwriter Icon Award.
Coming out to perform in honor of Carlile was Allison Russell, who performed Carlile’s “This Time Tomorrow”; and Brandy Clark, who performed Carlile’s “You and Me on the Rock.” Coming out for Gorley was special guest Luke Bryan, who performed two Gorley-penned hits: “What Make You Country” and “Play It Again.”
This story is developing.
The Copyright Royalty Board issued a landmark determination Tuesday (May 23) for Phonorecords III, maintaining an up to 44% raise for U.S. songwriters and publishers’ headline rate for mechanicals by the end of the period of 2018 to 2022.
The ruling increases those royalties each year during the five-year period — from 11.4% to 15.1% of service revenue by 2022 — but also affirmed key requests from streaming services during their lengthy appeal, limiting royalties based on total content cost (TCC) and reinstating a rate ceiling step in the formula. While the document is restricted from public viewing, an appendix to that determination containing the regulations at the heart of the restricted document was released to the public Wednesday (May 24).
To calculate how much is owed to songwriters and publishers, streaming services use a complex, multi-pronged formula dependent on numerous considerations. Many of these elements were revealed prior to the release of this week’s documents, so while it is noteworthy that the board is now in the last stages of finalizing the rules for Phono III after an appeal by digital services in 2019 was remanded back to the CRB, this determination cements what was previously reported. It has been described in the past as a “mixed decision” by insiders, with some stipulations favoring the interests of the music business while others favor streaming services.
Proceedings to decide how to pay songwriters and publishers for U.S. mechanicals during 2018-2022 began over five years ago. In 2018, a CRB determination set the headline rate moving upwards from 10.5% of a streamer’s revenue in 2018 to 15.1% in 2022 and increased the subscriber count calculations for discounted family and student plans to 1.5 times and 0.5 times respectively.
The 2018 determination also removed the publishing rate ceiling mechanism that prevents the publishers from automatically benefiting with higher payments when their label counterparts are able to negotiate higher rates for their master recordings. This was one of many qualms streamers had with this determination, given that many details were especially favorable to the music business. Spotify, Pandora, Google and Amazon noted then that they felt the board “acted arbitrarily and capriciously by simultaneously combining a TCC prong with an increase in the percentages of revenue prong, [or ‘headline rate’].”
Because some of the digital services hoped to regain some of the more streamer-friendly stipulations from the previous period — Phono II — Spotify, Pandora, Google and Amazon launched an appeal that was successful and resulted in a “remand” process that dragged on until now — after the 2018-2022 period was over. Apple, notably, did not participate in the appeal.
The new Phono III determination upholds the previous headline rate of up to 15.1% of streamer’s revenue by 2022, increasing each year by a full percentage point or by 0.9 of a percentage point, similar to how it was determined in 2018. This detail was revealed by the board in July 2022, as Billboard reported at the time. It also upholds the subscriber count calculations of 1.5 times for discounted family and 0.5 times for student plans, as proposed in 2019.
The appeal did, however, result in a few key wins for streaming services. It also reinstalled a rate cap of 80 cents per subscriber. Namely, the appeal lowered the total content cost calculations — which limits songwriter and publisher payouts to a percentage of what is paid to labels — from what the board determined in 2018.
While the music business was hoping for a TCC rate of 26.2%, the streaming services requested and received a range of different rates depending on the offerings, from the lesser of 20.65% of TCC up to 22% of TCC.
The U.S. mechanical royalty owed to music publishers and songwriters is calculated based on choosing between either the royalties calculated using the headline rate; or the lesser of either the percentage of TCC or 80 cents per subscriber. Whichever of the two pools is greater is selected as what’s known as the “all-in pool.” Afterward, the performance royalties are subtracted from the all-in pool, leaving just the mechanicals behind. The mechanicals are then measured against a per-subscriber pool, and whichever is bigger becomes the final mechanical royalty pool paid out to publishers and songwriters.
The most important TCC percentage rate for Phono III, the rate for standalone portable subscriptions, is 21% of TCC against 80 cents per subscriber.
Since the all-in royalty rates for this prong of the formula are determined based on the greater of the two options — either the headline rate or the lesser of the TCC pool or an 80 cents per subscriber calculation — it is feasible that the TCC rate will not be employed in certain future situations.
In the past, this prong of the formula has helped publishers get a percentage above the headline rate. For example, in 2021, when most services had reverted to the 2013-2017 term headline rate of 10.5%, the multi-pronged formula helped yield an all-in 13.4% of service revenue for publishing royalties.
Participants in the remand included the National Music Publishers’ Association, Nashville Songwriters Association International, songwriter George Johnson — who personally fought back against the streaming services on behalf of the independent songwriter in self-filed court documents — Spotify, Pandora, Google and Amazon.
Next, there is a 15-day window for rehearing motions. Then the Copyright Office will conduct a legal review for error, which could take up to 60 days. After that, the determination will be fully published, giving streaming services and the music business six months to go review and adjust past payments made for U.S. mechanicals to the new rates for 2018-2022 — a process that will likely be a financial boost for the music business.
Still, after this determination is published, the parties will have the opportunity to file a notice of appeal for 30 days.
“We are pleased the court finally has confirmed the result of Phono 3, a case which was decided in 2018. This initial remand decision upholds the 15.1% headline rate increase we fought for, however the length of time we have waited for this decision proves the Copyright Royalty Board system is woefully flawed. Now songwriters have some certainty about their rates, and we will ensure they receive the hundreds of millions of dollars that digital streaming companies owe them during this adjustment period,” said David Israelite, president/CEO of the NMPA.
“The testimonies of the three songwriter witnesses in this trial were powerful, convincing and illustrated the difficulty of songwriters earning a living in the streaming era — as well as the importance and value of the composition in the commercial music process,” said Bart Herbison, executive director of the Nashville Songwriters Association International (NSAI).
“Steve Bogard, Liz Rose and Lee Miller, all NSAI board members, were moving and informative and played a huge role in the historic increase,” Herbison added. “The process is long and difficult requiring time and preparation. We are thankful to these songwriters and to the NMPA.”
Artists, music executives, songwriters and more descended on Los Angeles’ Nightingale Plaza on Wednesday night for the National Music Publishers’ Association (NMPA) and Billboard Grammy Week Showcase.
Throughout the star-studded night, Demi Lovato, Sabrina Carpenter and Jimmie Allen each performed an intimate set, highlighting the work of a particular songwriter who helped each craft the sound of their latest studio set. Carpenter, the rising star behind Emails I Can’t Send, put a spotlight on Amy Allen, with whom she duetted on their co-written single “Vicious.”
Later in the evening, Allen performed a brand-new track titled “Small Town Anthem” as well as his 2022 hit “Down Home” before posing alongside Nashville powerhouse Liz Rose, who sits on the NMPA board of directors and was awarded song of the year during the party for co-writing “All Too Well” hand-in-hand with a certain superstar by the name of Taylor Swift back in 2012.
Lovato eventually closed out the musical festivities with back-to-back performances of “Feed” and “4 Ever 4 Me” from their 2022 album Holy Fvck — both of which were penned by Laura Veltz along with 11 more of the album’s 16 pop-punk-infused tracks.
Recording Academy CEO Harvey Mason jr. and NMPA president David Israelite were both on hand for the soiree, as well as songwriters from Makia, Nija Charles and Alex Raphael to Amber Mark and Patty Smyth. Heading into the 2023 Grammys on Sunday, Charles, Veltz and Allen are all among the inaugural pack of nominees for the first-ever award for songwriter of the year, non-classical.
Check out Billboard‘s exclusive gallery of the NMPA and Billboard Grammy Week Showcase below.
Arriving just before New Years’ Eve, on Friday (Dec. 30), the Copyright Royalty Board judges issued their ruling on streaming royalty rates for songwriters for the period of January 2023 to December 2027, upholding a settlement proposed by the National Music Publishers’ Association (NMPA), Digital Media Association (DiMA), and Nashville Songwriters’ Association International (NSAI) in late August. This ruling sets the rates for Subpart C and D of the five year period known as Phonorecords IV (or “Phono IV” for short), and it represents a compromise between the music industry and the streaming services, creating certainty around the royalties owed to songwriters for U.S. mechanicals.
According to the settlement, which the NMPA touts as the “highest rates in the history of digital streaming,” the headline rate will increase from 15.1% of revenue in 2023 to 15.2% in 2024 and then up a half a percentage point in each of the remaining three years, peaking at 15.35% in 2027, the final year of the term.
For stand-alone portable subscription offerings — like Spotify — the total content cost (TCC) component of the rate formula will be set at 26.2% of what’s paid to labels for the entire term, or $1.10 per subscriber, whichever is lower. Previously, those numbers were 21% of revenue and 80 cents per subscriber.
This means that the resultant TCC pool is measured against the total service revenue. Whichever is larger is designated the “all-in” pool, including both performance and mechanical royalties. After this is established, performance royalties are subtracted out, leaving behind solely the mechanical royalties.
Finally, the resultant mechanicals are compared against a pool, calculated by multiplying a streaming service’s total subscribers by 60 cents per person. Whichever of these two totals is bigger becomes the final mechanical royalty pool paid out to publishers and songwriters. Previously, the multiplier for the last 10 years had been set at 50 cents per subscriber.
This final ruling, reached two days before its rates are set to take effect, is a striking contrast from the lengthy proceedings to set streaming rates for Phonorecords III (2018-2022). Though that five year period is nearly over, its rates are still not finalized. In 2018, the music industry initially won the increase of the headline rate from 11.4% to 15.1% over the five year period, but the following year, Spotify, Amazon, Google and Pandora appealed, hoping to secure a lesser rate. This resulted in a legal back-and-forth that continues today, and although it is nearing its completion, it has created uncertainty surrounding what songwriters are owed for their work.
In hopes of streamlining the process and avoiding lengthy proceedings, the three settling parties worked together to propose a settlement for approval or denial by the CRB. Though other participants and interested parties outside of those who took part in the settlement were given the opportunity to explain their point-of-view during the month-long “comment period,” which ran from Nov. 7 to Dec. 7, the board explained in its ruling that its role is to either adopt or decline the settlement’s terms as presented, not to “modify” or add “requested adjustments.”
The ruling makes note of concerns provided by the 20 total commenters who weighed in on the settlement during the period, including that to some independent songwriters “the proposed rates might seem inadequate” and that several commenters prefer “alternative methods for inserting inflation adjustments.” “However,” the board states in the ruling, “the settlement is what is before the judges for consideration, not alternative rates or proposals for alternative procedures.”
In a statement Friday, NMPA president and CEO, David Israelite, celebrated the news. “Starting January 1, songwriters will enjoy the highest rates in the world and the highest rates in the history of digital streaming,” he said. “Thanks to the many songwriter advocates who worked hard to make this happen. There are still many challenges ahead to ensure that songs receive their proper value, but the future is bright.”
DiMA president and CEO, Garrett Levin, added, “We appreciate the Copyright Royalty Board for recognizing the benefits of this landmark agreement and the certainty it provides for streaming services, publishers, and songwriters alike. Thanks to the agreement, we can kick off 2023 focused on fans and continuing to grow streaming for the benefit of all stakeholders.”
Additional Reporting by Ed Christman
The Mechanical Licensing Collective held its second annual membership meeting this week in Nashville. In the presentation, the organization shared key insights into its second year of operation, including that it had distributed almost $700 million in blanket royalties to its members.
According to the meeting, the MLC, which has been operational since Jan. 1, 2021, now has 22,000 members, with 6,000 new additions in 2022 alone, and has over 17 million works registered to date, processing more than 98% of those registrations. To date, it has collected nearly $1 billion in mechanical royalties on behalf of songwriters and publishers, and rights holders have received more than $800 million in royalties, nearly $700 million of which were blanket royalties distributed directly by The MLC. About $120 million royalties were processed by The MLC but paid by digital service providers like Spotify, Apple Music, YouTube, and more, pursuant to voluntary licenses.
Since it began operations, The MLC says it has finished 19 monthly royalty distributions, all of which were completed on time or early. For the last six months in particular, the non-profit organization reported that its current match rate for all royalties processed through September’s royalty distribution is 89% and has exceeded 85% for six straight months.
“We are incredibly proud of these accomplishments,” says CEO Kris Ahrend. “Our team has worked hard to build robust data processing systems that allow us to distribute royalties accurately and on time. We have also released a suite of tools for our Members that enable them to manage their catalog data effectively and correct any missing or inaccurate data they find. While there is still more work to do, we are pleased with our progress and are deeply appreciative of all the support we have received from our Members and from the broader industry at large.”
During the meeting, the MLC also shared that Tim Cohan and Scott Cutler were elected to serve as board directors for a second three-year term, and Kara Dioguardi was elected as songwriter director of the board for a second three-year term.
The MLC was formed in response to the Music Modernization Act of 2018 to be exclusively responsible for administering blanket compulsory licenses for music compositions to streaming services.
The MLC was formed with designation from the the U.S. Register of Copyrights in response to the Music Modernization Act of 2018 to be exclusively responsible for administering blanket compulsory licenses for music compositions to streaming services. Operations began at the start of 2021, and it has been paying out royalties since April of that year, including money from Spotify, Apple Music, Pandora, and more.