State Champ Radio Royalties
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Here’s a story that captures everything wrong with Washington: Billion-dollar corporation asks Congress to force car manufacturers to install AM radio in every vehicle — a government tech mandate worth billions of dollars to its bottom line — while refusing to pay the artists and rights owners whose music is the very foundation of their business.
Last Congress, lawmakers such as House Democratic Leader Hakeem Jeffries saw through this scheme and stood firm. Radio lobbyists went home empty-handed. Now they’re back, asking for the same corporate handout, and still refusing to pay artists a dime.
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Before you say, “But who listens to AM/FM radio in 2025?”, ask yourself this question: Why are corporate radio lobbyists fighting so hard for this government mandate? Because keeping radio in cars is worth almost $14 billion in advertising every year. And why is it worth that much? Because hundreds of millions of Americans still listen to AM/FM radio every week.
Big Radio spent over $13 million lobbying Congress last year, which doesn’t even include the millions they contributed to political campaigns, to protect their golden goose at the expense of artists.
Corporate radio lobbyists engage in a cynical game of claiming something we all know isn’t true. They claim artists should be satisfied that “promotion” on radio is good enough compensation. But the days of Americans discovering music on AM/FM radio are long gone. Social platforms like YouTube and TikTok are where music breaks now. Last year, 84% of Billboard Global 200 songs went viral on TikTok first. Radio adapted by abandoning discovery and repeatedly playing popular songs radio listeners already know — in a single day recently, one iHeart station played songs by six major artists 112 times. One station. In a single day. Without paying a penny to the performers.
That isn’t promotion. It’s exploitation.
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That’s why the last Congress rejected radio lobbyists’ efforts to pass the AM in Every Vehicle Act. And why they must again reject it unless radio corporations agree to tie it to the American Music Fairness Act that ensures artists are paid fairly for radio plays.
Under the American Music Fairness Act, small and community stations would only have to pay between $10 and $500 a year to play all the music they want. The bill also gives radio corporations the opportunity to tell the independent Copyright Royalty Board what they think the performance royalty rate should be. If radio conglomerates believe their airplay has promotional value, they can make their case.
For some reason, AM/FM radio companies think they are special and that the principles of copyright shouldn’t apply to them. Every other platform pays artists for the work they do. Spotify. Pandora. SiriusXM. Only AM/FM radio — the most established music platform — claims it should be exempt from this concept.
For years, corporate radio lobbyists engaged in cynical practices to block music legislation. But now they are the ones who want Congress to act. And that gives music creators power — and they are speaking out with one voice.
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Over 300 artists – from Aerosmith to Barbra Streisand to Jelly Roll to Mariah Carey – wrote Congress earlier this year calling for passage of the American Music Fairness Act. This was an unprecedented display of artist unity for fair pay.
And just this week, Boyz II Men, Gloria Gaynor, Mike Love, Sammy Hagar, Smokey Robinson and others called on congressional leaders to pair the AM bill with the American Music Fairness Act. Their message was simple: “When you save the radio industry by mandating its technology remain in cars, we ask that you save the musician too and allow us to be paid fairly when our music is played.”
Artists have never been this fired up. Perhaps that’s because, like the rest of America, they are fed up with our workers being taken advantage of. This is about priorities. Big Radio corporations want Congress to mandate that their product be installed in every new car sold in America — government intervention to protect corporate profits. Meanwhile, musicians are simply asking to be paid for their work.
The solution is simple: If radio corporations want billions in government-mandated protection, they need to start paying the workers whose labor generates their wealth.
No corporate handouts without worker fairness. No radio without royalties.
Michael Huppe is the president and CEO of SoundExchange, where he champions creators and spearheads the use of technology, data and advocacy to power the future of music. To date, SoundExchange has distributed more than $12 billion in digital performance royalties to a growing community of more than 800,000 music creators. Michael is also an adjunct professor at Georgetown Law School, a published author, lecturer and active community member. He is a member of YPO, Forbes Business Council, and Fortune Brainstorm Trust, with opinions published in Variety, Rolling Stone, The Wall Street Journal, Music Business Worldwide, Billboard and The Hill.
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Mention Jeff Price‘s name in a room full of music executives and some will almost certainly wince and say that he is a troublemaker — an entrepreneur who enjoys noisily lashing out at those in the business he perceives are not doing right by music artists, songwriters, comedians and other creators.
Most conspicuously, that sense of righteousness has manifested in a two-year on-and-off email battle — often with journalists, including this reporter cc’d — with the Mechanical Licensing Collective (MLC), the nonprofit organization established by the Music Modernization Act (MMA) to administer blanket licenses for digital streams and downloads in the United States.
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Price claims that deficiencies in the MLC’s operations have deprived clients of his current startup, Word Collections, royalty payments, and, in other cases, have delayed payments.
What Price’s critics rarely acknowledge is that Word Collections is the third successful business that he has built as a result of his indignation. “It’s usually a combination of something that I’m frustrated with, combined with having an opportunity in my professional career to correct it,” he says of his entrepreneurial ventures.
For example: Price founded TuneCore in 2006 to help DIY artists and indie labels get their music onto digital platforms for a fraction of what it previously cost. Then, in 2013, he started Audiam, which claims YouTube publishing royalties for DIY songwriters who, in many cases, are uninformed about music publishing and how to get paid for their work. And he established his latest venture, Word Collections, in 2020 to fight for and collect mechanical royalties for comedians’ recordings, which many digital services were not paying at the time.
Although Price admits he departed the first two companies under unpleasant circumstances — possibly due to his combative nature — TuneCore and Audiam were successfully sold. Word Collections is still in a growth phase, but many of Audiam’s investors are helping to fund it — proof that he remains a bankable entrepreneur.
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And these investors are not small players. Key among them is Black Squirrel Partners, the investment division of Metallica’s business operations. The band and Black Squirrel were a client and investor, respectively, in Audiam and followed Price to Word Collections, which now also represents music artists. (Pop artist Jason Mraz is among other investors who did the same.)
The reason: Black Squirrel principal and partner Eric Wasserman says that while at Audiam, Metallica’s income “went from a small amount to a significant portion of the revenue from their [intellectual property].”
The band apparently is happy at Word Collections as well. In July 2023, Price and Word Collections closed on a $5 million investment round led by Black Squirrel, which became its lead investor. “We are very enthusiastic about this company and Jeff’s leadership,” Wasserman says. “Word Collections is doing a great job representing the Metallica catalog.”
Other Word Collections clients include Greta Van Fleet, The Offspring, Grace Potter, Thomas Dolby, Galactic, John Oates, Switchfoot, Richard Marx and the estate of Johnny Marks, among other songwriters. Word Collections, which employs a staff of 10, also represents the comedy catalogs of Robin Williams, George Carlin, Margaret Cho, Jerry Seinfeld and Billy Crystal, among others.
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Because of his history of saber-rattling, Price acknowledges that industry executives have accused him of being an opportunist looking for industry problems so that he could profit from those issues.
“Yes, it [can be] a business opportunity, but that’s usually not the driving force,” he says. “It isn’t like, ‘Ha ha, here’s this thing, let me go make money off it.’ It’s more of, ‘This thing is not right, let’s fix it,’ which also happens to be a business opportunity.”
Metallica
Ross Halfin
‘That’s stealing in my mind’
Slim with gray hair parted in the middle, Price does not resemble a street fighter. He even sports a broad smile in his LinkedIn photo. Of all the stands he has taken against the industry, he is best known for publicly opposing — and loudly criticizing — the MMA, which passed in 2018 and dramatically changed digital music licensing and how payments are made for compositions. He was even part of a group, which dubbed itself the American Music Licensing Collective (AMLC), that vied against the National Music Publishers’ Association’s (NMPA) preferred assemblage of major music publishers to be designated the MMA’s administrator of digital licenses.
The U.S. Copyright Office went with the NMPA-backed team — now known as the MLC — but not before Price had alienated several of the industry’s legacy players.
While the passage of the MMA was largely hailed as a beneficial game-changer for songwriters, Price alleges that the law created a form of legal theft that benefits large publishers. That’s because songs for which the publisher or payout instructions cannot be determined are designated as black-box monies — they are also called unmatched or unclaimed royalties — and if the rightful recipient cannot be determined within three years, the MLC has the authority to distribute these monies to publishers based on their market share.
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Unmatched royalties total hundreds of millions of dollars annually, and Price contends that the bulk of them are generated by DIY creators who don’t know how to properly register their songs with the MLC. Worse, he says, if those creators learn belatedly that their royalties were distributed elsewhere, they cannot retroactively claim them, because according to the text of the MMA, distributions of unclaimed and/or unmatched royalties “shall supersede and preempt any state law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply.”
“I believe [digital services] should get a license and pay a commensurate royalty, and the entity that earns the royalty should get the money,” Price says. “The other side is like, ‘We don’t want to do that. Why don’t we just take all this money that’s not getting paid and hand it to ourselves based on a black-box [market-share] allocation?’ And that’s stealing, in my mind.”
However, the MLC has yet to use this market-share mechanism to disburse any black-box monies, which have been accumulating for the last eight years and predate the passage of the MMA.
Price has other issues with the MLC, and in addition to the blizzard of emails he has sent its CEO, Kris Ahrend, and other executives there, his complaints are collected in a 53-page memo submitted by Word Collections that opposes redesignating the organization as the administrator of blanket compulsory mechanical licenses “without significant policy and governance changes to achieve the [MMA’s] intended goals and objectives.”
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Word Collections’ memo is one of 63 posted on the U.S. Copyright Office website as it conducts a mandated periodic review on whether the MLC should be redesignated. While other submissions suggest improvements, the overwhelming majority support the MLC’s reappointment, if the more than 500 publishing companies and industry trade organizations cited in the MLC’s own filing are counted. Among those in favor are Warner Chappell Music, peermusic, the RIAA, the Recording Academy, the Academy of Country Music, the Association of Independent Music Publishers and the NMPA.
The MLC declined to comment, but industry executives say in its defense that the organization is dealing with a vast amount of data and, as a result, its execution “will never be flawless or perfect,” as one music publishing source puts it.
In the early days of streaming, Price’s squeaky-wheel approach earned him grudging respect as a renegade. But over the years, his detractors have grown in number, and some say they are weary of his unyielding combativeness, even if he is right.
‘The messenger being the problem’
One executive says Price “is a classic example of the messenger being the problem, not the message,” explaining, “While he is really trying to get the most money for songwriters, the way he has gone about highlighting these issues pisses off everybody.”
An executive in the digital music realm calls Price “litigious.” In reality, Price has not directly sued any digital services, but through data supplied by his company, he was involved in songwriter lawsuits filed against Spotify, including a 2017 legal action led by Camper Van Beethoven founder and musicians’ rights activist David Lowery that resulted in a $45 million settlement, and others by Four Seasons member and songwriter Bob Gaudio, Bluewater Music, and Dolby.
Word Collections’ data was also used in lawsuits filed by a number of comics against Pandora, including Andrew Dice Clay, Bill Engvall, Ron White and the estates of Carlin and Williams. Price says his clients usually don’t resort to litigation until a digital service has spent about a year ignoring requests for payment.
Others in the industry offer a more charitable assessment of Price. One executive who has crossed swords with him says he’s “difficult to work with” but concedes that “98% of what he says is correct.” The executive adds, “[Price] is not a lawyer, so sometimes he gets a nuance wrong, but in terms of the important stuff — like how digital services didn’t pay publishing properly and what’s wrong with the system in publishing — he was the only one making noise.”
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“I think Jeff is a catalyst and is brilliant,” says Jordan Bromley, entertainment group leader for law firm Manatt Phelps & Phillips. “Guys like him don’t follow rules or lines of politics. They say the quiet things out loud.”
Though Price concedes that he “once” apologized to the MLC for mistakenly claiming it hadn’t paid out Pandora royalties due to Word Collections, he expresses no regret for his unflagging approach to perceived transgressors. “Water on stone eventually makes the Grand Canyon,” he says. “I am working from outside the system to change the system.”
Before entering the music industry, Price lived an itinerant life. His mother founded an advertising agency in the 1970s when it was still a male-dominated business, and they moved frequently for her career. Growing up, he says he attended eight schools in a 12-year period. He also spent time in Japan and Israel, where he served in the latter’s military reserve. He worked as a bartender, sold books out of mall kiosks and was a production assistant for film/TV producer Rachael Horovitz, the older sister of the Beastie Boys’ Adam “Ad-Rock” Horovitz.
Price, who attributes his rectitude to once witnessing his father stop an attack against another person, entered the music industry in 1991 as a co-founder of the SpinART indie label, which released the music of such indie acts as Frank Black, The Church, Apples in Stereo, The Boo Radleys and Vic Chesnutt before succumbing to bankruptcy in 2007. “SpinART taught me everything I know about the industry,” Price says. “I wouldn’t be able to make informed decisions without the knowledge that experience gave me.”
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As iTunes, Rhapsody and other online music stores started up, Price began looking for a digital distributor for SpinART, but says he was angered by the terms he was offered, especially what he considered unwarranted high distribution fees. “Distributors were demanding 15% to 30% of revenue to basically send a digital file to places like Apple and Amazon,” he says. “Overlaying the analog business funnel on top of the digital channel just didn’t make sense.”
Price voiced his grievances in a 2006 issue of Billboard. “I despise the economic model of aggregators. They are morally repugnant,” he said. “On the physical side, distributors work their asses off. They provide co-op opportunities; they’ll have regional sales reps. In the digital world, they don’t provide that service. They’re an aggregator.”
Through his dissatisfaction, Price saw an opportunity to fill a void in the market, and with partners Gary Burke and Peter Wells launched TuneCore in 2006. To date, it’s his most successful venture and remains a major indie player 13 years after he and his partners left the company.
TuneCore’s model was simple and elegant. It initially charged a flat rate of $7.98 an album per year and a delivery charge of 99 cents per song to put titles up on all the digital stores, with all sales revenue going to the artist. By 2010, prices had increased to $49.99 an album per year and $9.99 per song.
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Price’s refusal to play by established rules earned him scorn when he created his own International Standard Recording Code (ISRC) — essentially digital fingerprints for tracking royalties — for works released by TuneCore artists instead of paying the RIAA, which, at the time, assigned the codes.
‘Took off like a rocket‘
TuneCore “took off like a rocket and it was a heck of a learning curve,” Price recalls. “All of a sudden, we were doing over a million dollars a month. We were like, ‘Holy crap!’ And then that number became $8 million to $10 million a month. It got crazy how quickly it grew.”
The company eventually needed funding to accommodate that growth and brought in Guitar Center and Opus Capital as investors. But the introduction of private equity blew up management in 2012. Price and some of his staff were ousted, and in 2015, the company was acquired by Believe Music, where it is now one of the largest independent distributors in the world.
While at TuneCore, Price realized that indie artists were not collecting their fair share of music publishing royalties and started a publishing administration division. After his departure, he founded Audiam in June 2013 as, he says, a corrective.
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His team built a system that tracked down cover versions of songs and user-generated videos on YouTube and other streaming platforms that included unlicensed recordings of songs. On behalf of its clients, Audiam claimed the songs to collect both publishing and recorded master royalties that were due.
A publisher administrator client of Audiam says, “We may have found 30 cover versions of a song, but when Jeff entered the picture, he said, ‘Here are 225 ISRC cover versions of that song.’ ”
Like TuneCore, anyone could sign up for Audiam, but this time Price’s economic model took an undisclosed percentage of the revenue.
Official videos of a song were easy to find and claim, but songs included in user-generated videos and cover versions performed by DIY artists were not, and Audiam’s success enabled the company to expand into licensing and collecting publishing royalties from other digital platforms such as Spotify and Amazon. But that meant Price was soon butting heads with those platforms’ service agents, like the Harry Fox Agency and Music Reports Inc.
Audiam eventually attracted major artists such as Metallica, Mraz and Jimmy Buffett. Industry heavyweights also invested, including Q Prime co-founder Cliff Burnstein, then-WME head of music Mark Geiger, Victory Records founder Tony Brummel, Distrokid founder Philip Kaplan, Silva Entertainment namesake Bill Silva and Provident Financial Management.
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When Audiam’s growth required new sources of funding, Price and his investors agreed to sell the company to the Canadian performing rights organization SOCAN in 2016. But his relationship with the PRO soured, in part because of his vociferous opposition to the MMA and the NMPA’s backing of the legislation that calls for market-share distribution of black-box monies.
When Price and the AMLC team he helped assemble began jockeying with the NMPA’s choice to administer blanket mechanical licenses for the MMA, informed sources say his efforts — which included posting videos to YouTube that questioned the fairness and transparency of music publishing — resulted in SOCAN management taking fire from the mainstream music industry.
SOCAN pressured Price to abandon his protest, sources say, and his relationship with the PRO became further complicated when Audiam’s investors began agitating for an additional equity payout because, they claimed, the company had hit previously agreed-upon profit performance targets.
Price says he resigned due to the equity payout issue, which created a conflict because he was serving as his initial investors’ security representative while also still leading the company. He says he agreed to stay on long enough to help prepare Audiam for a sale, but was terminated before that happened.
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Price declines to elaborate but says his parting with Audiam, like his departure from TuneCore, was “unpleasant,” and in 2021, SOCAN sold the company — ironically, to the MLC’s data management agent, the Harry Fox Agency, which is now owned by the Blackstone-owned SESAC Music Group. As for Audiam’s investors, sources say that a lawsuit filed on their behalf resulted in an undisclosed settlement in addition to the initial payout from the sale. (SOCAN declined to comment, as did Eric Baptiste, who led the PRO when it purchased Audiam.)
By then, Price had started Word Collections, which originally focused on comedy streams. He likened comedians’ jokes to song compositions that were deserving of publishing royalties. Up to then, most digital services had been paying record labels for comedic master recordings but not the underlying literary compositions. “That’s what Jeff does,” says ClearBox Rights founder and principal John Barker. “He recognizes when people aren’t getting paid, and he finds a solution.”
After the expiration of Price’s noncompete clause with Audiam, Word Collections expanded into music publishing administration, putting him in competition with his former company. And though TuneCore remains Price’s most successful startup, he claims Word Collections’ revenue now matches the publishing royalty volume collected by Audiam.
Price retains strong opinions on the MMA and gives no indication that he’s ready to ease up on the MLC, certainly as long as publisher market share could be used to disburse black-box monies. But he claims he has dialed back his combativeness on a number of industry issues because much of what he complained about has been corrected.
And in a number of ways, Price is no longer the outsider he claims to be. “It’s an interesting paradox for me,” he says. “We are directly licensed outside North America with the largest digital services in the world, which enables Word Collections to collect mechanical and performance royalties from streams. Wherever we can, we disintermediate the CMOs, the subpublishers and the black boxes in between songwriters and their money. For nondigital, we collect from 104 countries and are direct members in 40 of the music rights organizations in their countries through a joint venture with Nashville publishing administrator Bluewater Music,” he adds. “We work for some of the most important artists in the world and some of the biggest artist management companies and music companies in the world. I like being on the same side of the fence as them.”
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Stem co-founder Tim Luckow has launched a new platform that aims to help artists and songwriters claim so-called “black box” royalties, it was announced Thursday (Oct. 30).
The platform, called Notes.fm, seeks to simplify the process of claiming these royalties. It requires only an artist or songwriter’s name to scan streaming services, collection societies and registries, including the Mechanical Licensing Collective (MLC), to identify missing recording, publishing and performance rights royalties and fix issues to ensure future income flows to them directly. In addition to Luckow, the founding team includes Derek Davies and Montalis Anglade.
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Now open to the public, Notes.fm does not take a cut of royalties but instead boasts a subscription model beginning at $5 a month. It previously held a year-long beta with more than 400 artists, from established names like Mt. Joy, James Blake and Girl in Red to emerging artists like Adam Melchor and Adam Wise, along with the estates of artists including Howlin’ Wolf. During that time, Notes.fm identified more than $10 million in missing or unclaimed royalties from songs encompassing more than 50 billion streams — an average of $15,500 per artist, according to the company.
The company adds that some artists saw six-figure payouts by participating in the beta, including Mt. Joy, who collected six figures across corrected historical registrations and new registrations for songs including “Highway Queen,” which was the first song to secure 100% royalty registration from delivery by Notes.fm on its release in 2024. Additionally, Blake discovered that around a quarter of all songs in his catalog had missing or incomplete registrations and was able to recover unclaimed royalties from those works.
“When it comes to music royalties, complexity is the enemy,” said Luckow in a statement. “For over a century, musicians have struggled to get paid because of disconnected systems that were not designed for the digital streaming era. Notes.fm fixes that, handling the complex work in the background so artists can focus on the music. Every musician deserves every dollar they’ve earned, and we’re here to make sure that happens.”
Added Steve Bursky, founder and partner at Foundations, which was an early investor in Notes.fm: “What sets Notes.fm apart is its ability to move artists and their teams from insight to action. Rather than merely flagging unclaimed royalties, Notes.fm empowers users to identify, correct, and directly recover what’s rightfully theirs, representing a fundamental leap forward in artist-first rights management.”
More information can be found at the Notes.fm website.
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Irving Azoff recently slammed YouTube as “by far the worst offender” when it comes to paying creators fairly. As one of the largest and most successful managers of artists in history, his opinion carries a great deal of weight.
Songwriters specifically are paid through a complex, regulated environment, so digital services have myriad ways of manipulating the system. Those who care about creators often hear about how these platforms mistreat them — and if you ask 10 industry leaders who is the worst, you might get 10 different answers.
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To make sense of who is friend or foe, here is a ranking based on what they’re doing for and against songwriters today. Beyond their public relations and industry parties, it is essential to understand how these services actually treat the creators they depend on*,* so here are the broad criticisms.
One must start with Spotify, the largest music-focused streaming service. While Mr. Azoff ranks YouTube as enemy number one, when it comes to songwriters, no one comes close to Spotify.
Last year, the streaming giant revealed — months after imposing the scheme — that it had unilaterally added audiobooks to premium subscriptions so that it could attempt to qualify for paying a lower royalty rate — since music was now part of a “bundle.”
This scheme is currently being challenged in court by the Mechanical Licensing Collective (MLC), which pays streaming royalties to rights holders. The NMPA has also pushed for a Federal Trade Commission (FTC) investigation into this as an unfair business practice, as once Spotify imposed this bundle on its users, it raised prices and made it virtually impossible to return to a music-only premium plan.
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Spotify also has fought for extremely low royalty rates at the trial that determines streaming royalties, which takes place every five years in Washington, D.C. And when we, alongside NSAI, won a significant royalty increase in 2018, Spotify spent years appealing that decision. Eventually, they lost that appeal — but songwriters were denied much-needed income throughout the process. Justice delayed is justice denied.
The platform also has added insult to injury through tone-deaf PR stunts like its “Secret Genius” campaign — honoring the very songwriters whose genius is no secret — while it simultaneously fought them in court.
Another significant swipe at songwriters is its free service. Instead of being a free trial period or an on-ramp to encouraging users to pay for music, millions of users can listen to unlimited songs for free without ever signing up. This service delivers the most minuscule royalties to songwriters — it’s almost incalculable.
Mr. Azoff’s opinion about YouTube is shared by many in the industry. The service is notorious for using hardball tactics in negotiations. Since the YouTube platform largely involves synchronization (video) royalties — which are in a free market for songwriters — there is even more opportunity cost. The general perception for years has been that YouTube benefits much more from the music on its service than it pays.
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Amazon is complex in that music is only part of its much larger ecosystem. Unfortunately, it has also recently taken advantage of lower rates by bundling music with other services. However, it has not been as brazen as Spotify and has generally been more concerned with its relationship with songwriters. There are opportunities for the platform to improve, and we are hopeful that it continues to keep conversations open with the end goal of seeing music creators as business partners instead of pawns.
TikTok leads the world in social media music consumption — it is essential to the platform’s success. While deals have been struck in the past, the service has used its size to pressure songwriters and artists to return to the platform when there were attempts to negotiate fairer rates. Songwriters suffer disproportionately from this dynamic. While artists receive exposure on the service that can be monetized through touring and merchandise, songwriters need direct compensation, so holding out for more is essential, and thus far has been largely unsuccessful.
Apple Music continues to stand alone in several areas. When other services appealed the aforementioned royalty rate increase in 2018, Apple did not. Additionally, as Apple Music head Oliver Schusser announced at our Annual Meeting in Manhattan earlier this year, the platform will never give music away. “I think it’s crazy that 20 years in, we still offer music for free,” Schusser said. “We’re the only service that doesn’t have a free service. As a company, we look at music as art, and we would never want to give away art for free.” While we will still push for higher rates from Apple, this sentiment must be appreciated and amplified.
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Satellite radio shouldn’t be counted out. SiriusXM — which now owns Pandora — has a troubling history of paying extremely low rates to songwriters. In fact, today digital radio pays significantly more to artists annually than AM/FM radio pays songwriters. Think about that. The radio relationship has completely flipped. Songwriters used to make a large percentage of their income from terrestrial radio, and now they make less than artists make from satellite radio — which is dwarfed by interactive streaming — alone.
So who is the worst offender? The answer depends on who is in a current contract negotiation or a rate-setting proceeding. However, when entering into any of these marketplace or regulatory environments, it is crucial to understand where the players stand and how they have historically positioned themselves.
The Super Bowl of all of this starts in a few months before the Copyright Royalty Board in Washington, D.C. At that time, the major streaming services will put forth their proposals for how they want to pay songwriters for 2028–2032. This will be illuminating, and all creators and advocates must seriously consider what they put forth. We will make sure songwriters know what they propose.
There is an opportunity for digital platforms to make serious headway in terms of their relationships with songwriters at this proceeding. So pay close attention, and we will adjust rankings after they reveal their positions. Stay tuned.
David Israelite is the president and CEO of the National Music Publishers’ Association (NMPA). Founded in 1917, NMPA is the trade association representing all American music publishers and their songwriting partners.
Trending on Billboard YouTube paid more than $8 billion to the music business in the 12-month period of July 2024 to June 2025, Lyor Cohen, YouTube’s global head of music, said Wednesday (Oct. 22) during a fireside chat with Billboard editor-in-chief Hannah Karp at Billboard Latin Music Week. Related The amount the music business receives […]
It has been over one year since Spotify brought limited audiobook functionality to its Spotify premium products in November 2023. In March 2024, in a major shift for songwriters and music publishers, Spotify began reporting its three principal premium subscription tiers to the Mechanical Licensing Collective (MLC) as “bundled subscription services” rather than as “standalone portable subscriptions,” as they had previously done. In response, the MLC sued Spotify in May 2024 for allegedly underpaying music publishers, but a judge dismissed the case in January 2025. A motion for reconsideration filed by the MLC in February 2025 remains pending in the Southern District of New York.
Earlier this month, the National Music Publishers’ Association (NMPA) stated at its annual meeting that this change has resulted in a first-year loss of $230 million in mechanical royalties to songwriters and music publishers. Spotify’s own recent SEC filing states a loss of 205 million euros in mechanical royalties for the 13-month period between March 1, 2024, and March 31, 2025. This is actual money that should have, but did not, make it into the pockets of songwriters and music publishers. It has instead remained with Spotify.
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Spotify’s actions have already been publicly lambasted by this author, the NMPA and the songwriter and music publisher communities as perhaps the worst affront in a long line of offenses committed by Spotify against songwriters. So why am I writing about this issue again, a year after first doing so in Billboard? Because with a year’s worth of additional facts and data at hand, it is my opinion that this is one of the greatest injustices visited upon songwriters in the era of music streaming, sadly perpetuated by the company that has perhaps benefited more than any other from the creativity and labor of songwriters. All songwriters and music publishers should be aware of this critical issue and deserve to know all of the supporting facts.
When I wrote on this issue back in May 2024, I opined that Spotify’s actions would likely reduce the effective share of its U.S. subscription revenue paid to songwriters and music publishers from the agreed-upon 15.1% to 15.35% in the Phonorecords IV settlement to less than 12%. I wrote that Spotify’s timing felt engineered to partially sideline songwriters and music publishers from benefiting from price increases that were reportedly soon to take effect (and did). I wrote that the Spotify Audiobooks Access tier was seemingly not commercially viable as a standalone product and was launched in the U.S. (and nowhere else) with the primary and perhaps sole purpose of supporting Spotify’s attempt to report most of its subscription tiers to the MLC as bundles and reduce mechanical royalty payments to songwriters. And finally, I wrote that Spotify was motivated to take publishing royalties out of the pockets of songwriters in order to improve its gross margin and offset the costs of running its new audiobook initiative.
One year later, I believe that all of this has proved to be true. Let’s look at the facts.
What is a bundle?
In this context, a bundle occurs when Spotify — or another music service — is sold to consumers for a single price as part of a package which includes other goods and services. Some bundles package music with digital services such as subscription video on demand and/or physical goods such as phones, tablets and delivery services. The components of the bundle typically can be purchased on an individual basis if a consumer is not interested in purchasing the entire package, and those components typically have a clear independent commercial value to some segment of consumers.
For rightsholders, the potential value exchange is that a tech platform may package a bundle of goods and services (including music) together in a manner that could potentially bring additive revenue, users and engagement to music creators that, absent the bundle, might be less obtainable. Basically, the platform is offering a package deal to reach customers who may be less likely to pay for a music service sold on its own.
Rightsholders operating in a free market may be asked by the licensee to help offset their other costs of operating such a bundle (e.g., non-music licensing costs, other operating expenses) by agreeing to reduced royalty terms than what would typically apply to a standalone music service, which a licensee may also offer. Rightsholders are able to consider such requests, sometimes referred to as “bundle discounts,” by engaging in discussions with the licensee and utilizing pertinent data and information such as market research, reporting and revenue forecasts to inform their viewpoints and make decisions that are in the best interests of music creators.
A range of outcomes is possible in the free market. A rightsholder may refuse to license the bundled service at all, or they may license the bundled service for the same price and terms they’d grant to a standalone music service, or they may agree to some means of discounting. The Phonorecords IV settlement includes examples of such terms, including a specific definition of revenue for bundled services and other terms that are reduced relative to those that apply to standalone music services.
When this works as intended, music rightsholders may choose to effectively co-invest with a streaming service in creating a discounted bundle that they feel has the potential to earn additional revenue, even if there may be less revenue earned on a per-user basis from the bundle relative to a standalone music service. The potential benefit to music creators is that they may capture additional royalty amounts from users who might not have signed up for a music service absent the additional non-music components of the bundled offerings. The licensee is rewarded for bringing some level of added value to music creators by building, offering and marketing the bundled package to consumers.
Why Spotify’s bundle is different
But this is not what Spotify has done. Spotify has built a music subscription empire based upon the creativity and labor of songwriters and now reduced their U.S. mechanical royalties in a manner that implies that songwriters now contribute less to the success of Spotify. That could not be further from the truth. Regardless of the legal issues surrounding this matter, Spotify’s reduction of songwriters’ mechanical royalties, in my opinion, has no commercial merit.
In June 2024, a few months after Spotify began including the limited audiobook functionality (15 hours of listening time per month) in Spotify’s premium tier, it launched a tier called Spotify Basic. Spotify Basic, which is $1 to $3 less expensive than Spotify’s premium tier, depending on the number of users, is what Spotify’s premium tier was prior to November 2023 — a music subscription service without the audiobook functionality. It is the service that tens of millions of users signed up for prior to November 2023 because they acknowledged the value of unfettered access to music and are willing to pay for it. But all of those premium users, regardless of whether or not they want audiobooks, are now considered by Spotify to be bundled subscribers as of March 2024. That is, unless they manually selected to switch to Spotify Basic.
Most Spotify users probably don’t know that all of this happened, or that Spotify Basic exists. Spotify Basic is not available to new subscribers; it is only available in the U.S. to existing premium users who were subscribed as of June 20, 2024. Promotion and marketing of Spotify Basic to qualifying users has been limited. If a Spotify user cancels their Spotify Basic plan later on, it is not possible to resubscribe to it. Basic is also not available via upgrade paths. For example, a subscriber cannot upgrade from Basic Individual to Basic Duo. Instead, they are forced to pay $2 more for Premium Duo even if they have no interest in audiobooks.
Since Spotify’s November 2023 launch of the limited audiobook functionality, it has not been possible for new Spotify users to obtain a Spotify subscription that does not include audiobooks (save for qualifying student plans, which are bundled with Hulu). This is important because, absent a clearly presented and available option for a new (or existing) customer to choose between one offering that is music-only and another offering that includes audiobooks but is more expensive, the very clear conclusion is that music alone continues to drive consumer decision making around Spotify, including users’ decisions to pay for Spotify, what price they are willing to pay and what levels of price increases they are willing to endure without canceling their subscriptions.
Most Spotify users also don’t know that there’s a Spotify Audiobook Access tier. Last year, many — including this author — opined that the Audiobook Access tier was launched solely in the U.S. for the primary or sole purpose of lending legal support and a pricing benchmark to Spotify’s reduction of mechanical royalties. One year later, this appears on its face to have been true. Spotify Audiobook Access only remains available in the U.S., and there appears to be little, if any, earnest effort on Spotify’s part to promote and market it to consumers. They do not publicly report subscriber numbers for Spotify Audiobook Access, nor do they seem to talk about it much. In my opinion, it appears to be an offering that Spotify is not serious about and that was launched to prop up the reduction of songwriter’s mechanical royalty payments.
I’ve also been asked why Spotify did not declare its premium tier to be a bundled product when it began offering podcasts to subscribers many years before its introduction of audiobooks. The answer may lie in the fact that podcasts are monetized by selling advertising to businesses and brands, and there has been clear demand for Spotify to provide that service. Audiobooks, by contrast, have historically been monetized mostly via subscriptions sold to consumers by digital retailers. In Spotify’s case, it is possible that while some segment of premium subscribers might utilize limited audiobook access if they are already paying to access unlimited music, those same subscribers might not be motivated enough to pay Spotify specifically for access to audiobooks. In other words, engagement alone might not be an indicator of willingness to pay. It costs Spotify money to offer audiobooks to its subscribers, and if those subscribers aren’t willing to pay for them specifically, it’s possible that Spotify needs to offset those costs in some other manner. As I’ve opined before, I believe this has been a material driver behind Spotify’s bundling initiative that has cost songwriters and music publishers hundreds of millions of dollars in U.S. mechanical royalties to date.
Spotify’s financials post-bundling
Finally, let’s talk about how this issue has impacted Spotify’s financial performance. Spotify’s premium gross margin increased from 29.1% to 33.5% between Q4 2023 (the last full quarter unimpacted by Spotify’s reduction of mechanical royalties via bundling) and Q1 2025. The $230 million first-year loss of U.S. mechanical royalties reported by the NMPA equates to about 1.4% of Spotify’s global premium revenue of 13.82 billion euros (approximately $15.89 million) for 2024. There are a number of factors that have allowed Spotify to improve its gross margin performance, but its reduction of U.S. mechanical royalties has contributed to that improvement on a very real and material basis, as Spotify has noted on quarterly earnings calls.
Spotify’s gross margin improvement has undoubtedly been a big factor in the performance of its stock, which is up about 130% year-over-year as of this writing. It is perverse that songwriters and music publishers have contributed so meaningfully towards these recent improvements in Spotify’s financial performance and the market’s reaction, yet find themselves not only unrewarded for their contributions but on the wrong end of Spotify’s efforts to reduce its U.S. music publishing costs.
So, where do songwriters and music publishers go from here? While it has been reported that Universal Music Publishing Group and Warner Chappell have entered into direct agreements with Spotify for the U.S. as part of broader deals that include their associated record labels, the upcoming Phonorecords V process before the Copyright Royalty Board — which starts early next year — presents the entire songwriter and music publishing community with the opportunity to right Spotify’s wrong. I encourage all who depend on songwriting and publishing royalties for their livelihood to educate themselves on the facts and stay aware of new developments.
Adam Parness was the global head of music publishing at Spotify from 2017 to 2019. He currently operates Adam Parness Music Consulting and serves as a highly trusted and sought after strategic advisor to numerous music rightsholders, notably in the music publishing space, as well as popular global brands, technology-based creative services companies and firms investing in music and technology.
A producer on Lil Wayne’s hit 2008 album Tha Carter III has sued Universal Music Group (UMG) over claims that he’s owed more than 10 years’ worth of royalties totaling more than $3 million. UMG was hit with the federal lawsuit on Thursday (May 22) over Darius “Deezle” Harrison’s production work on Tha Carter III, […]
Five years ago, fitness companies looked like the next big thing for music rights owners as the onset of the COVID-19 lockdown turned Peloton, the maker of high-tech stationary bicycles and treadmills, into a household name and the leader in a suddenly hot connected fitness market.
Peloton’s founder, John Foley, had created an online version of music-driven, brick-and-mortar studios such as SoulCycle. Unlike the staid strength and cardio products of earlier years, the new breed of bikes and treadmills manufactured by the company were internet-ready and could stream live or pre-recorded workouts. Other startups took notice, with competitors like Tonal and Hydrow vying for market share.
“There were fitness companies who saw what Peloton was doing, which was really putting music at the center of their workouts,” says Vickie Nauman, a licensing expert and founder/CEO of CrossBorderWorks. Instructors, some of whom would become small-time celebrities, used music to create identities and build communities. “This was the original founder’s vision,” she says.
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Flush with investment capital, fitness companies followed Peloton into expensive licensing agreements with rights holders to infuse music into their at-home products. Royalties from connected fitness companies, as well as social media and other new revenue streams, went from about 3% of the average catalog’s revenue in 2021 to “something like 7%” in 2023, according to Jake Devries, a director in Citrin Cooperman’s music and entertainment valuation services practice.
As it turned out, 2020 and 2021 were peak at-home fitness. The financial impact of the post-pandemic fitness bubble was seen in Universal Music Group’s results for the fourth quarter of 2024: A decline in its fitness business accounted for a nearly one percentage-point decline in its subscription growth rate, equal to approximately $12.5 million. And during its most recent earnings call on April 29, the company noted that fitness revenue was flat in the first quarter.
After pandemic restrictions ended, the stay-at-home fitness business ran into competition from gyms and fitness studios as people returned to public life. As a result, according to numerous people who spoke with Billboard, connected fitness companies had less cash to put into music licensing and, realizing they didn’t need massive catalogs and didn’t have the expertise to properly manage the rights and issue royalty payments, looked for more affordable, less arduous options.
Peloton, founded in 2012, was a trailblazer in at-home fitness. Its studio-quality bikes, which currently cost between $1,445 and $2,495, are outfitted with touchscreens that stream live and on-demand content for an additional $44 per month. Music is a focal point for the online classes, just as brick-and-mortar studios like SoulCycle incorporate popular songs into their workouts. Despite the high prices of Peloton’s bikes, online content has a greater financial impact: In its latest fiscal year, subscriptions accounted for 63% of the company’s $2.7 billion of revenue and 96% of its $1.2 billion of gross profit.
Music enhances online workouts in the same way it makes going to a fitness studio or a gym more enjoyable. But building cycle workouts around setlists of specific songs isn’t straightforward. Unlike brick-and-mortar locations that require only blanket licenses from performance rights organizations such as ASCAP and BMI, Peloton required more expensive direct licenses to incorporate music into its streaming content. After being sued by music publishers for copyright infringement in 2019, Peloton settled the following year and began negotiating the proper licenses.
Such a license had never been done for a fitness company, so major labels and publishers modeled custom licenses for Peloton based on their deals with Spotify and other on-demand music platforms, according to a licensing executive familiar with the negotiations. The agreements called for Peloton to pay rights holders based on a monthly per-subscriber fee, and the pool of royalties would then be proportionally divided based on usage, according to this person.
Peloton had built a name for itself in the fitness community by 2019, but it was supercharged the following year by the COVID-19 pandemic. As people stayed away from public places such as gyms and fitness studios, Peloton’s revenue jumped from $384 million in fiscal 2019 to $1.45 billion two years later, and its share price climbed from $27 following its September 2019 initial public offering to $171 in January 2021.
The enthusiasm for at-home fitness also benefited Peloton’s competitors. Hydrow, which offers rowing machines with Peloton-like streaming content, raised $25 million in June 2020 and another $55 million in March 2022. Tonal, a connected strength training platform, had raised a total of $90 million by 2019, before the pandemic piqued interest, then raised $110 million in September 2020 and $380 million in two funding rounds in 2021 and 2023 — the latter at a lower valuation.
As other connected fitness companies quickly sought music licenses to replicate Peloton’s success, rights holders offered them a version of the Peloton license, which provided them rights to large catalogs. (Peloton, the lone publicly traded company of the bunch, revealed in its 2021 annual report that it had a catalog of 2.6 million tracks.) “Once there was a model, it was always going to be easier to replicate a model you think is working than create a new licensing deal,” says the licensing executive.
But these fitness startups, desperate to corner share in a fast-growing market, initially made some missteps. “Because it was such a race, I think that many online fitness companies saw this as an existential opportunity, and they did not take the time to investigate what they were getting into,” says Nauman. “And so, they licensed all of this music, and that sent a signal to rights holders all over the world that fitness was going to be an enormous new line of business.”
The Peloton-style licenses weren’t cheap. Record labels and publishers were “aggressive with the rates they were asking for a lot of the services,” says an attorney familiar with the terms of the licensing contracts. An app-based product would likely pay 30% of revenue to music rights holders, according to this person, while hardware-based products with higher overhead and costs would pay approximately 16% of revenue. “That’s a pretty big share of revenue for a company that is not a music company,” the attorney adds.
The Peloton-style sync licenses also came with more complexity than fitness companies could handle. Managing a music catalog requires technology and know-how that fitness companies don’t have. They needed help matching compositions to sound recordings to ensure licenses were acquired from all rights holders, and the reporting required for PROs and making direct payments to record labels and publishers were outside of the fitness companies’ expertise.
As fitness companies dealt with stagnant growth, they laid off staff and tightened their budgets. From February 2022 to May 2024, founder/CEOs at Peloton, Tonal and Hydrow were forced out. When Peloton replaced Foley with former Spotify CFO Barry McCarthy in February 2022 and announced plans to lay off 20% of its corporate staff, its share price was trading under $30, down more than 82% from its high mark just 13 months earlier. Tonal and Hydrow each laid off about 35% of their workforces in 2022, and Hydrow further thinned its staff in 2023.
Sync licenses are crucial to Peloton because classes are often built around playlists, and music is crucial to the indoor cycling experience. But not every connected fitness product needs to integrate music in a way that requires a more expensive, Peloton-style license. For many other companies, a non-interactive, DMCA-compliant radio service with pre-cleared music is more than adequate.
Constrained by tighter budgets, some connected fitness companies started looking for alternatives to their original licenses. Today’s connected fitness CEOs tend to be most concerned about the cost and complexity of music licensing and the likelihood of being sued, says Jeff Yasuda, founder/CEO of Feed.fm, a provider of licensed music to connected fitness companies such as Hydrow, Tonal, Future and Ergatta. Being able to use popular music in their apps isn’t a priority.
“For a fitness company, your job is to make the best jumping jack app on the planet,” says Yasuda. Making a mistake handling music rights would put a company in jeopardy of facing lawsuits brought by music rights holders. “It’s just not worth the risk,” he says.
Feed.fm assures clients that the rights are compatible with various laws in different countries. It provides pre-cleared catalogs from Sony Music, Warner Music Group, Merlin, Insomniac Music Group and A Train Entertainment, and it works with record labels to create thematic stations, including one curated by CYRIL, a recording artist for Warner-owned Spinnin’ Records, and a Brat-inspired station featuring Charlie xcx, Dua Lipa, Chappell Roan and other artists that represent the brat summer of 2024. A rights holder itself, Feed.fm has signed 40 to 50 artists, which its vp of music affairs, Bryn Boughton, says gives it greater flexibility in licensing.
Outsourcing the licensing ultimately saves fitness companies money, says Con Raso, co-founder/managing director of Australia-based Tuned Global. Raso’s pitch to fitness companies is to invest money in marketing and let companies like Tuned Global handle the technology. “We don’t think, unless you’re doing it on a massive scale, you’re going to save money,” he says. Raso estimates that Tuned Global can remove 70% of clients’ costs versus licensing music and managing rights themselves.
Beyond traditional fitness apps, there’s big potential for licensing ambient or mood music for a new wave of mental health-focused apps. In the last six months, Raso has seen an uptick in demand for licensed music from companies more broadly associated with health and medical care. Consumers have a wide choice of apps for yoga, meditation, mindfulness and sleeping that incorporate music. Led by companies such as Calm, the market for spiritual wellness apps hit $2.16 billion in 2024, according to Researchandmarkets.com, and will grow nearly 15% annually to $4.84 billion by 2030. Record labels have already made forays into this space. Universal Music Group, for example, formed a partnership in 2021 with MedRhythms, which uses software and music to restore functions lost to neurological disease or injury.
The COVID-era boom of connected fitness products, though, seems all but over, having failed to live up to lofty expectations. Chalk it up to the chaotic nature of the pandemic and fast-moving startups battling for market share, says Nauman. “I don’t think it’s anybody’s fault,” she says. “I think it was such a lightning-in-a-bottle time that they were in a race to get to market as fast as they possibly could.”
Additional reporting by Liz Dilts Marshall.
SoundExchange and the National Association of Broadcasters (NAB) have reached a broad rate settlement that includes per performance rates rising from $0.0025 this year to $0.0032 in 2030 for non-subscription digital audio transmissions.
The expansive settlement, which covers the period of 2026-2030, allows SoundExchange and the NAB to forego the usually expensive Copyright Royalty Board rate trials, but the settlement still needs formal approval by the CRB.
Other aspects of the settlement involve gradually raising the current annual minimum fee of $1,000 per station by $50 each year, reaching $1,250 for 2029 and 2030. Additionally, the annual minimum fees will be capped at 100 stations, which means that the large radio networks will have annual minimum fees grow from $100,000 currently to $125,000 in the last two years of the settlement.
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“This settlement with broadcasters provides needed increases for the creative community we represent, and allows us to forego the costs, uncertainties, and distraction connected with any litigation,” SoundExchange president and CEO Michael Huppe said in a statement. “Striking a business solution that both parties can accept has many benefits over battling it out in court and allows us to focus resources on other efforts and services benefiting our creator community.”
Additionally, the settlement mandates shorter reporting and payment deadlines, requiring radio stations to submit data and payments within 30 days after the end of the month, down from the current 45-day timeframe. Furthermore, radio stations also must provide contractual access to performance data held by third-party vendors, which should enhance SoundExchange’s auditing capabilities.
On the positive side for radio stations, late fees for underpayments are reduced from 1.5% to 1% per month. This change, along with the predictability of incremental costs and the capping of minimum payments, offers additional financial relief.
In noting that the NAB is “extremely pleased” to reach the settlement with SoundExchange for the CRB Web VI rate setting period of 2026-2030, NAB president and CEO Curtis LeGety said in a statement that “this settlement provides critical certainty around streaming rates in a way that is sustainable for broadcasters large and small, ensuring that local stations can continue to deliver the experiences and connection that millions of listeners depend on every day.”
Furthermore, he said, “It also includes meaningful improvements in areas like audit late fees and minimum payments, helping broadcasters focus their resources on serving fans and supporting the artists who make broadcast radio so impactful, all while avoiding the high costs of litigation.”
The specifics of the incremental rate increases show that after rising from $0.0025 in 2025 to $0.0028 in 2026, the per performance rate will increase by 1/100th of a penny each subsequent year, culminating in $0.0032 in 2030.
The settlement will be published in the Federal Register so it’s available for public comment, although that doesn’t appear to have happened as of yet, at least according to a Billboard search of the Federal Register and the Copyright Royalty Board websites.
National Music Publishers’ Association (NMPA) president/CEO David Israelite joined the Association of Independent Music Publishers (AIMP) to give his annual State of Music Publishing address on Wednesday (April 2) at Lawry’s in Beverly Hills. In his speech, Israelite discussed hot button issues for publishers, including Spotify bundling (“we are still at war”), AI concerns, PRO reform and more.
Israelite started by sharing the NMPA’s data on the revenue sources for songwriters and publishers. It found that songwriters and publishers earn 45% of revenue from streaming services, 11% from general licensing and live, 9% from traditional synchronization licensing, 8% from mass synch (licenses for UGC video platforms like YouTube), 8% from radio, 7% from TV, 4% from labels, 2% from social media, 1% from sheet music, and 1% from lyrics. The NMPA says that 75% of its income is regulated by either a compulsory license or a consent decree, while the remaining 25% is handled via free-market negotiation.
On the AI front, Israelite explained that the NMPA is actively watching and supporting pending legal action.
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“We have not filed our own lawsuit yet, but I can promise you that if there is a path forward with a productive lawsuit, we will be filing it,” he said. As far as trying to regulate AI through policy, Israelite added, “We’re doing everything that can be done.” The NMPA is participating in both a White House initiative and a Copyright Office initiative, but he added, “If you are waiting for the government to protect your rights and AI models, I think that is a very bad strategy.”
Instead, Israelite said that the “most emphasis” should be placed on forming business relationships with AI companies. “When that date comes [that AI companies are willing to come to the table to license music], I believe the most important principle is that the song is just as valuable, if not more, than the sound recording in the AI model,” he continued.
During the speech, Israelite said he had a recent conversation with “the CEO of one of the major AI companies” who told him that “by far, the song [as opposed to the sound recording] is the most important input into these models. I tell you this because I am fearful that as these models develop, if we do not protect our rights, we will find ourselves in a situation where we are not getting as much or more than the sound recording when it comes to revenue…that is a responsibility of this entire community to fight for that.”
Israelite added that his “number one problem when it comes to revenue is how we are treated with these bundled plans,” pointing to publishers’ ongoing issues with Spotify. Last year, Spotify added audiobooks into its premium tier offerings and began claiming those tiers as “bundles,” a term referring to a type of subscription that qualifies for a discounted rate for music. Spotify claimed that it now had to pay to license both books and music from the same subscription price and subsequently started paying songwriters and publishers about 40% less for music, according to the NMPA. At the time, Billboard estimated that this would lead to a $150 million reduction in payments to publishers in the next year, compared to what publishers would have been paid if the tiers had never been reclassified.
In January, news broke that Universal Music Group (UMG) and Spotify had forged a direct deal that gave UMG’s publishing arm improved terms, effectively minimizing the harm caused by the previous year’s bundling change. Shortly after, Warner Music Group (WMG) followed suit with its own direct deal with Spotify for improved publishing remuneration. “I know in this room in particular, there is a great concern about what those market deals mean for the whole industry,” Israelite says. “I want to be very clear about this. I believe those market deals are a good thing, but until everybody benefits from the same protections about how bundles are treated, we are still at war. Nothing has changed.”
Israelite added later that UMG and WMG’s direct deals could be cited as “evidence” to support the publishers’ position during the next Copyright Royalty Board (CRB) fight, which will determine the U.S. mechanical royalty rates for publishers in the future. The CRB proceedings begin again in 10 months, and Israelite estimates his organization will spend $36 million in the next trial to fight for the publishers’ position. While he often noted that “we shouldn’t be in this system in the first place” during his address, Israelite conceded that despite his calls for a legislative proposal that would give publishers and writers the right to pull out of the 100-year-old system of government-regulated price setting for royalties, the “brilliant idea” is “next to impossible to accomplish.”
Israelite went on to detail all the ways the NMPA and others are still fighting back against Spotify over the bundling debacle. He noted that the Mechanical Licensing Collective (MLC) “is doing a fantastic job of continuing the fight” against Spotify, adding that its lawsuit, which was dismissed earlier this year by a judge who called the federal royalty rules “unambiguous,” has “been revived.” He added, “[It’s] our best chance of getting back what we lost.”
Elsewhere in his speech, Israelite told the crowd of independent publishers that the NMPA has now sent three rounds of takedown notices to Spotify for various podcast episodes, citing copyright infringement of its members’ songs, and that “over 11,000 podcasts have been removed from Spotify” as a consequence.
The recent calls for performing rights organization (PRO) reform are also top of mind for publishers in 2025. Last year, the House Judiciary Committee sent a letter to the Register of Copyrights, Shira Perlmutter, requesting an examination of PROs, citing two areas of concern: the “proliferation” of new PROs and the lack of transparency about the distribution of general licensing revenue. This spurred the Copyright Office to take action, opening a notice of inquiry that allows industry stakeholders to submit comments, sharing their point of view about what, if anything, should be reformed at American PROs. However, some fear that the notice of inquiry could lead to increased regulation at the PROs, further constraining publishing income.
Israelite addressed this by giving publishers a preview of the NMPA’s forthcoming comments. “I will tell you today exactly what our comments are going to say,” he said. “It is very simple. Music publishers and songwriters are already over-regulated by the federal government. Congress should be focused on decreasing regulation of our industry, not increasing regulation of our industry, and to the extent that any of these issues are substantive issues. This should be dealt with between the PROs and their members. It has nothing to do with the Copyright Office. It has nothing to do with Congress. It has nothing to do with the federal government.”
