Royalties
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As the author of the Music Modernization Act (MMA), I am thrilled with the benefits it has provided music creators and music streaming services. Rarely does Congress come together in a bipartisan, bicameral way to respond to a market problem with a comprehensive, collaborative and business-driven solution.
The bill updated copyright law for the digital generation, and the cornerstone of the legislation — the creation of the Mechanical Licensing Collective (MLC) — has been a shining example of an industry working together to solve major market challenges. However, recent attempts by streaming services to redefine the original intent of the statute, to benefit themselves, are concerning and must be corrected.
The MLC was created to solve a massive music industry problem. Streaming services often failed to find the correct copyright owners and therefore held on to large sums of money owed to songwriters and music publishers. This both kept earnings from rightful owners and also opened streaming services up to large amounts of liability — from which lawsuits were piling up, costing them hundreds of millions of dollars. Both sides had a major incentive to find a better way forward.
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Along with my colleague, Congressman Hakeem Jeffries (D-NY), I authored a bill to establish a company that would be funded by the digital streaming companies, and governed by copyright owners, which would receive all of the streaming mechanical money owed and then distribute that money based on copyright ownership. The company would also operate a first-of-its-kind public database so that song ownership information would be more transparent than ever.
To create the MLC, the U.S. Copyright Office held an impartial designation period where anyone could campaign to run the company. A coalition representing the vast majority of the music publishing and songwriting industry came together and was selected.
In five short years, the MLC was activated and is now a towering example of success. It has distributed over $2 billion in royalties to publishers and songwriters. It has a match rate of over 90%. It operates the most accurate, open database of music rights information in the world.
Crucially, as the MLC is responsible for ensuring accurate payments to its songwriter and publisher members, the MMA made clear that it not only has the authority but is mandated to enforce the rights of its members if it determines any streaming service is not reporting or paying properly. Most recently, the MLC was forced to litigate against Pandora for underpaying royalties.
Unfortunately, this has led DiMA, which represents the major streaming companies and has a seat on the MLC’s board, to attempt to reinterpret the original intent of the MMA. They are pushing the misguided idea that the MLC was meant to be “neutral” when it comes to enforcing the rights of copyright owners. Nothing could be further from our objective.
This definition of neutral is simply another way to take the voice away from those who have struggled to be heard when it comes to receiving what they are owed for their labors. This was never the intent.
Should the MLC not enforce and litigate when necessary to uphold the rights of its members, those members would have absolutely no recourse to defend their property rights. This notion of neutrality would make the MLC toothless and completely undermine the important role of the Collective. Allowing the MLC to dole out royalties is inextricable from its primary purpose of ensuring those royalties are correct.
It is a perversion of the legislation to attempt to convince current lawmakers that the MLC was meant to give equal weight to the opinions of the digital companies as the rights of songwriters. Of course, there is a massive incentive for DiMA and its membership to want the MLC to relinquish its role as enforcer of music creators’ copyrights. Billions of dollars in royalties are on the line.
The streaming services’ vision of a neutral MLC is not in line with the original intent of the MMA, and they know it because they were intimately involved in the lengthy negotiation of the language of the bill. The resulting legislation was fair and allowed for the collective and the courts to do their jobs when it comes to disputes.
The five-year milestone since the MMA was signed into law is an important time for reflection and refining. However, it is not a time to redefine the most important music legislation of our time.
Doug Collins is a lawyer and former Member of Congress representing Georgia’s Ninth Congressional District. He served as Ranking Member of the House Judiciary Committee as well as Vice Chairman of the Subcommittee on Courts, Intellectual Property, and the Internet. He introduced the Music Modernization Act along with the bill’s lead cosponsor, Rep. Hakeem Jeffries (D-NY).
On Tuesday (June 11), the Association of Independent Music Publishers (AIMP) held its annual global music publishing summit at 3 West in New York. Boasting panels on a wide-ranging list of publishing hot topics, from fraud to film/TV synchronization, the one-day event featured executives from ABKCO, Rimas Publishing, Spirit Music Group, Warner Chappell, CD Baby, Pex and more.
One highlight of the day included the panel Opportunities Abroad: Maximizing Overseas Collection featuring Michael Simon (Harry Fox Agency), Alexander Wolf (SESAC International), David Alexander (MusicIndustry.Africa), Mark Chung (Freibank Music Publishing, IMPF) and Tomas Ericsson (AMRA).
During the panel, the experts, who hail from around the world, discussed the increasingly globalized music market, which regions hold the most value and how to maximize that value. “It can’t be like it was in the 90s,” said Simon. “Back then the answer was to sit back and wait for checks to arrive in your mailbox — that world seems to be disappearing.”
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Some experts stressed the importance of leaning on sub-publishers with local knowledge to ensure proper collections. Ericsson, whose company AMRA collects digital royalties on a worldwide basis, explained that using AMRA can also be a solution to pain points in collection worldwide because “the majority of societies do not have the capital incentives to invest in better technology and therefore use whatever means they have to process this money to others.”
“My bet is on Asia,” said Wolf of the region with the most untapped potential for publishers. “They’re knowledgeable, and they’re making money… Africa as a continent is more troubled. Countries like Nigeria are especially great countries, great musicians but in the last thirty years, Nigeria had seven different collection societies. There is value there, but we need patience.”
The AIMP event coincided with what’s known as New York Music Month (NYMM) — a collection of events across the five boroughs to support the city’s local music scene. Though the festivities continue throughout the entire month, the bulk of NYMM events happen the week of June 10-15. In the publishing business, the annual gathering is fondly known as “Publishers’ Week” or “Songwriters’ Week” in reference to events like AIMP, the National Music Publishers’ Association’s annual meeting and the Songwriters Hall of Fame — all of which take place in the same five-day period. Others also call it “Indie Week,” a reference to the Association of American Independent Music’s five-day conference of the same name.
At European collective management organizations (CMOs), the hits just keep on coming. On Wednesday (June 5), SACEM announced record results for 2023, with collections up 5% to €1.49 billion ($1.6 billion based on the 2023 average euro-to-dollar conversion rate) compared to the previous year and distributions rising 17% to €1.23 billion ($1.33 billion). The French CMO also announced that its board has voted unanimously to extend Cécile Rap-Veber’s term as CEO.
The results come amid a thriving period for European CMOs. In April, GEMA, the German collecting society, announced that revenue rose 8.4% in 2023 to €1.28 billion ($1.4 billion). PRS for Music in the United Kingdom followed at the end of May, disclosing 14.2% revenue growth to £1.08 billion ($1.34 billion). However, in both of those cases, as well as SACEM’s, the results followed years of more substantial growth fueled by music fans eager to get back to seeing live shows in the wake of the pandemic. A year ago, for example, SACEM announced that it had taken in €1.41 billion ($1.54 billion) in 2022 — 34% more than it did the prior year.
Slower growth seems to be bringing with it a focus on controlling costs, and SACEM’s ratio of expenses to revenue collected is 10.76%, the lowest in its history. “What matters to me is the best value for our members,” SACEM CEO Cécile Rap-Veber tells Billboard. She adds that a more efficient disbursement of royalties boosted growth in distributions beyond that of revenue, saying: “We are distributing faster and faster.”
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The biggest source of revenue for SACEM was online, which rose 13% to €557 million ($602.67 million). The second biggest source was general royalties — a category that includes places where music is central, such as concerts, as well as places where it’s not — which was up 18.5% to €388 million ($420 million). Finally, broadcast rights, including TV and radio, brought in €318 million ($344 million).
Over the past few years, Rap-Veber has helped modernize the French CMO with an initiative known as “SACEM 3.0,” with a focus on delivering results at a reasonable cost.
“2023 was a year of confirmation in the implementation of our major strategic priorities,” Rap-Veber said in a statement. “We continued our transformation into Sacem 3.0 and worked to improve efficiency, ensuring the sustainability of our management account and optimising both our collections and the amount distributed to our members.”
More than ever, CMOs are competing for online rights — but also, on some level, for bragging rights. ‘Competition,” says Rap-Veber, “has forced a lot of us to improve.”
You’ve most likely heard by now the news that Spotify, through a surprising bundling maneuver, has unilaterally decided to give songwriters a substantial pay cut. As part of our ongoing efforts to provide the songwriting community with data and details related to this incredibly important income stream — which at this point must feel like a continual moving target — we have reviewed and analyzed Spotify’s reporting for the first month where they instituted this change (March), and compared it with the month prior (February).
What Is Happening?: Spotify has decided to bundle audiobooks in its premium tier offerings (affecting 85% of total Spotify subscribers). By doing so, they are now claiming that nearly half of total subscriber revenue is attributed to audiobooks, reducing reported service revenue to music to 52%. This results in a substantial decrease in payments to songwriters, which we explain below.
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In March, total mechanical revenue paid by Spotify was reduced by 33.9% (from $36.7 million in February to $24.3 million). This is where the reported yearly $150 million reduction comes from — an estimate built on Spotify’s prior-year performance and payment reports to the Mechanical Licensing Collective. The twist here is that Spotify reported that performance royalties increased 18.75% from February to March (from $31.2 million to $37 million).
Spotify’s performance royalties always fluctuate from month to month (by as much as +/- 10%) but the magnitude of this change is unusual (and unexplained). Was March’s unexpected growth in Spotify’s performance royalties an anomaly, or a precursor to a new level of payments for that royalty? Due to the structure of the mechanical royalty payment formula, an increase in performance payments results in a decrease in mechanical payments.
For many songwriters who have agreements with music publishers, performance royalties are beneficial because half are paid directly to the songwriter and not through their publishing agreement, whereas mechanical royalties run through the publisher.
So, while mechanical payments in March were reduced by 33.9%, the total reduction in payments to songwriters was 9.75% ($67.9 million to $61.3 million), which on an annual basis comes out to $80 million.
Historical Performance vs. Mechanical Payments for CRB III: This harkens back to prior reporting (and confusion) a couple of months ago when the streaming services reported an increase in performance revenue over the prior five-year period (2018-2022). While we cannot explain exactly why performance revenue changed in this historic accounting period, we can presume that it had something to do with deals that were being negotiated during that time and were finalized and took retroactive effect by the time the final remanded reporting was provided and required by the final determination of the appeal.
If Spotify Cut Revenue in Half, Why Aren’t We Seeing a 50% Reduction? The payment structure has various protections so that Spotify and other similar digital service providers cannot unilaterally adjust their prices to the detriment of songwriters, as Spotify has done here. One of those protections is an obligation to pay songwriters a portion of what they pay record labels, to the extent that that amount is greater than the service revenue percentage. This is called the “TCC Prong,” or “Total Content Cost Prong.” Because Spotify’s deals with the record labels apparently do not give them the flexibility to choose what they can bundle into offerings and make price reductions, what they pay the labels has not changed. In fact, in March, that percentage increased by 5.86%, or $13.1 million.
So is the Total Yearly Reduction 150M or 80M? This will most likely land somewhere in the middle, as it depends on what Spotify reports paying on performance (i.e., if March’s performance royalty growth was an anomaly) and what it pays to the labels. Over the course of the next several months, if Spotify does not change its position, we will be monitoring and reporting trends in percentage and actual results as part of our ongoing effort to provide the songwriting community with actual and up-to-date information related to their royalties. You can also check the current going rate of publishing revenue yourself at any time with our royalty calculator, updated monthly.
Spotify spent five years litigating against publishers and songwriters to establish rates for 2018-2022. The result was a positive increase but a major delay in payment. In total, the mechanical increase from all digital service providers came out to about $250 million over that period. Of that, Spotify contributed $98.6 million more, and that’s just from its restated 2021-2022 period. Songwriters did not receive the eventual rate increase until earlier this year.
When Spotify, the NMPA and NSAI reached an agreement for 2023-2027, we thought the fight was over. We were wrong.
At the end of March, Spotify reported yearly revenue of $15 billion. This audiobook bundling maneuver, which affects 100% of all musical content on its service, reflects less than a 1% cost savings for the tech behemoth. And for a limited time, at that, since the settlement referenced above ends in 2027. This begs the question to Spotify analysts and shareholders alike as to whether it is worth it — and leads to the obvious answer: “It is not.” Spotify should reverse course immediately and find 1% savings somewhere else that doesn’t work to decimate the revenue of millions of American songwriters, the lifeblood of our treasured American music industry.
Jordan Bromley leads Manatt Entertainment, a legal and consulting firm providing services to the entertainment industry for over 45 years. He sits on the Board of Directors for the Music Artists Coalition, an artist first advocacy coalition established in 2019.
Trent Smith is a financial analyst at Manatt Entertainment with extensive experience in the streaming economy.
Recently, Spotify has reclassified its premium individual, duo and family subscription services as “bundled subscription services” in an ill-informed attempt to deprive songwriters and music publishers of their rightfully earned U.S. mechanical royalties. As a result, the agreed-upon revenue share rate for Spotify premium, currently 15.2%, may effectively be reduced to less than 12%, depending upon a number of factors. Losses to songwriters and publishers, estimated by Billboard to be $150 million on an annualized basis, will undoubtedly increase over time as subscription revenue and users grow.
Let me say straight away that this column is not intended to embarrass or disparage Spotify in any way. Quite the opposite: This is a respectful appeal to the company, specifically its senior leadership team, to do the right thing by songwriters, regardless of what strategies they appear to believe are legally permissible.
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Spotify has an unfortunate and documented history of punching down at songwriters and music publishers. In just the last few years, this includes appealing the Phonorecords III decision, which reasonably raised the mechanical royalty rate from 10.5% to 15.1% of revenue over a five-year period (while also providing discounted terms for family and student accounts that are beneficial to Spotify and other music services). Almost immediately after serving notice of its intention to appeal Phonorecords III, Spotify moved to retroactively implement the Copyright Royalty Board’s final pre-appeal decision and clawed back a multi-million-dollar credit from songwriters and music publishers throughout 2019. The appeal and remand process lasted for many years, ultimately delaying the payment of a large amount of mechanical royalties, including those earned during the hardship of the COVID-19 pandemic, until February 2024. And finally, in late 2021, Spotify proposed statutory rates for 2023-2027 that the NMPA referred to as the “lowest royalty rates in history.”
While the settlement of Phonorecords IV in 2022 was celebrated by both streaming services and music publishers, Spotify and other DSPs had especially good reason to rejoice. The settlement provides that revenue share rates minimally increase from the prior rate of 15.1% to 15.35% over a five-year period while also providing for discounts related to not only family and student accounts but also Spotify duo —subscription tiers that are meaningful to Spotify given the strong growth of family and duo plans, as the company has noted in earnings reports. The settlement also provides specific terms for DSPs that choose to bundle a qualifying music subscription service with other products and services.
It’s difficult to imagine why Spotify could have any degree of buyer’s remorse concerning the Phonorecords IV settlement or deliberately attempt to manipulate its terms given how clearly reasonable and fair it is. Spotify presumably entered into the settlement with the full knowledge and acceptance that it was agreeing to pay the revenue share rates of 15.1% to 15.35% upon a properly undiluted revenue base, as it had been doing until March 2024.
But Spotify has again devalued the contributions of songwriters to its platform, a move that has been described by rights and advocacy organizations as “cynical,” “potentially unlawful,” “greedy” and “offensive.”
I’ve been asked a lot in recent weeks why Spotify is doing this. The answer, other than perhaps “because they believe they can,” is simple. I believe that Spotify is unjustly attempting to reduce the amounts it pays to songwriters and music publishers in order to (1) effectively use the displaced royalties to offset the costs of running its audiobook business and (2) improve its margins.
Spotify’s reframing of the vast majority of its subscription services as bundled subscription services is a work of fiction. It has done so, in part, by launching a standalone audiobooks access tier that does not appear commercially attractive to users and was launched, at least to an extent, to support its “bundling” strategy. As noted in the Mechanical Licensing Collective’s (the MLC) legal complaint against Spotify, the audiobooks access tier is largely hidden from view on Spotify’s website on a page where the primary purpose is to steer subscribers to premium, not audiobooks access.
The audiobooks access tier is also only available in the United States, the only country to which the Phonorecords IV settlement and accompanying statutory framework applies, and is notably not available in any other country where audiobooks are available in premium. Spotify’s intent is rather obvious on its face, but to think that the availability of the audiobooks access tier as implemented is something of a silver bullet that qualifies it to reclassify its premium individual, family, and duo tiers as a bundled subscription service is a true mark of acting in bad faith. To do so when Spotify is reportedly on the cusp of rightfully raising prices in the United States is all the more insulting.
In the wake of the ire directed at Spotify from songwriters and the music publishing community in recent weeks, the company has issued statements to Billboard and other media.
First, Spotify has stated that it is simply doing what other services have done with bundled products. In my opinion, this is misleading. The Spotify competitors that have availed themselves of bundle reporting methods have done so for products that are bona fide bundles consisting of individually available services and products that hold a clear commercial value, and to which users actively elect to subscribe. Spotify has even done this itself for bundled products on a more limited basis, in the manner actually intended by the Phonorecords IV settlement and its predecessors. But as the MLC’s legal filing against Spotify notes, anyone who subscribed to Spotify premium prior to November 8, 2023, did not elect to receive audiobooks content or functionality. Many premium users have not utilized audiobooks even once; and, as of this writing, a non-student Spotify subscription without audiobooks does not even exist.
Spotify has also been quick to point out that music publishers “agreed to and celebrated” the Phonorecords IV settlement. I can assure readers there is no world in which the music publishing community truly believed that it was agreeing to bundling provisions in the manner in which they are being abused by Spotify to drastically reduce its payments to songwriters and music publishers. At minimum, Spotify’s actions clearly violate the spirit of the agreement, and to say otherwise is blatantly dishonest. To the extent Spotify may believe it has outsmarted songwriters and music publishers, there should be no pride in ownership.
Finally, Spotify has stated that it “paid a record amount to publishers and societies in 2023 and is on track to pay out an even larger amount in 2024,” which presumably refers to Spotify’s global rather than U.S. domestic spend on music publishing royalties. This may be true given Spotify’s growth trajectory, which as of its most recent reporting was up 20% year-over-year in revenue and up 14% in premium subscribers. However, it is wholly irrelevant and a deflection from the issue. Simply paying more from one year to the next does not atone for the grave offense at hand. The amount of royalties paid is not the only pertinent metric.
Spotify has repeatedly stated its desire to become a more efficient and profitable company. I applaud that. Spotify operating profitably is good for the music business — including songwriters and music publishers. And Spotify is welcome to spread its wings and invest in new areas of business such as podcasts and audiobooks. But let’s be clear: The royalties that Spotify pays to songwriters and music publishers (and other music rightsholders including record labels) are not preventing it from becoming or remaining profitable.
Spotify has said on multiple occasions, including during its 2022 investor day presentation, that it has chosen to prioritize growth over profitability and has done so deliberately and willingly. Its music gross margin has operated at strong numbers and improved over time, in part thanks to its marketplace initiatives, but overall gross margin has been dragged down by investments the company has made in the podcast space. Not all of those investments, including content deals and acquisitions of other companies, have produced positive results, as is well documented in various media, and Spotify has since pivoted to operate more efficiently and better ensure that its costs do not grow quicker than its revenue.
The royalties Spotify pays to songwriters and music publishers are not the problem, nor are the royalties it pays to others. Spotify receives tremendous value in exchange for the mechanical and other royalties that it pays for musical works, and songwriters should not be treated by Spotify as a drag on its margins. To pay slightly north of 15% of revenue for songwriters’ creative output is a gift, and there is absolutely no reason for Spotify to sneak around corners to dilute songwriters’ income. It is beyond the pale, even relative to actions that Spotify has taken against songwriters and publishers in recent years.
I love Spotify and have been a user since the very beginning. But I value the songs upon which it has built its entire business even more. Spotify is a house built by songwriters. In the modern listening environment, which heavily depends upon personalization, recommendations and playlists, songs and songwriters are an even more crucial part of the infrastructure and the value conveyed to consumers who pay Spotify subscription fees.
I’ve often said that compensating songwriters in accordance with the value that they bring to music streaming platforms is not only good business but also good for business. Spotify’s relationship with songwriters and publishers, whether it realizes it or not, is mission-critical and not just about maintaining positive sentiment. Given the global stature of Spotify and the company’s interest in various content types including podcasts, music videos and lyrics, returning its relationship with songwriters and publishers to a respectful position is important to its future. Unfortunately, Spotify’s relationship with the songwriter and music publishing communities that it has built its business upon is now more fraught and damaged than ever. Trust has been almost entirely eroded. That cannot merely be chalked up to, as Spotify stated during its most recent earnings call, “natural tensions between suppliers and distributors.” But it may not be too late to fix things.
Here is my genuine and respectful appeal to Spotify, and it’s not a big ask: Please voluntarily honor the Phonorecords IV settlement on the intended terms that you know fully well were agreed to and promptly reverse course on your misguided attempts to reduce U.S. mechanical royalties in this manner. Songwriters and the broader music publishing community will thank you. If this is too much to ask, I believe the songwriting community will never want to hear another word from Spotify about, to use the company’s own words, “giving a million creative artists the opportunity to live off their art.”
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.
Spotify is changing the way it pays songwriters and publishers in the United States — leading to an estimated $150 million cut to U.S. mechanical royalty payments — and the music business is speaking out.
By adding audiobooks into Spotify’s premium, duo and family tiers, Spotify now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams given that it now has to pay licensing for both books and music from the same subscription price tag — which will only be a dollar higher than when music was the only offering.
Spotify argues that adding audiobooks reclassifies the service from a “standalone portable subscription” to a “bundled subscription offering,” according to the royalty rate formula provided in Phonorecords IV. The National Music Publishers Association (NMPA) and Nashville Songwriters Association International (NSAI), both of which represented the music business in Phono IV proceedings, disagree with Spotify’s reading of the settlement, with the NMPA calling it “a cynical and potentially unlawful move” that is a “perversion of the settlement we agreed upon in 2022.”
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Last week, Billboard calculated that this change will lead to an estimated $150 million cut in U.S. mechanical royalties from premium, duo and family plans for the first 12 months the bundle rate is in effect, compared to what songwriters would have earned if the three subscription tiers were never bundled. The change affects payments starting in March 2024, so it will not impact Spotify’s premium, duo or family payouts for the first two months of 2024. Specifically, the estimate refers to losses for the first 12 months after the premium, family and duo tiers are qualified as a bundle, not calendar year 2024.
As Spotify grows, the music business fears that the difference between what payments to songwriters and publishers would have been if premium continued to be counted as a regular standalone service versus what will be paid now that music and audiobooks have been bundled will continue to increase.
Spotify says it will soon offer a music-only subscription tier that will pay out in the same way Spotify premium used to, but there’s not yet a timeline for when this option will launch.
Back in March, Spotify released a statement about the change to the bundle rate, stating that the company is “on track to pay publishers and societies more in 2024 than in 2023. As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.”
Below is an updating list of music industry reactions to the news:
National Music Publishers’ Association (NMPA)
“It appears Spotify has returned to attacking the very songwriters who make its business possible. Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace. We will not stand for their perversion of the settlement we agreed upon in 2022 and are looking at all options.”
Association of Independent Music Publishers (AIMP)
“Two weeks ago, we spoke out about the potential consequences for independent music publishers should Spotify go forward with its plan to bundle a previously free service, audiobooks, with music subscriptions. Now that an actual number has been put to the potential lost revenue for music publishers, a staggering estimate of $150 million per year, we feel the need to speak out again.
“It is a deeply cynical move for Spotify to attempt to circumvent the CRB settlement agreed to by the NMPA & NSAI and DiMA in 2022 via this bundling ‘loophole,’ and further insulting that the price of a Spotify subscription will actually increase for users while cutting revenue for the songwriters who keep their business alive. This is especially problematic for independent music publishers, as they and all publishers are legally prevented from negotiating protections against bad-faith tactics such as this, while labels are allowed to do so in a free market.
“At this point, we still do not know how Spotify plans to notify its subscribers of this change. The right thing to do is to default existing subscribers to music-only accounts, and then give them the option to add-on the audiobook service for an additional $9.99 per month — Spotify’s proposed standalone rate for audiobooks. This ensures a proper, non-devalued royalty rate for both music and audiobook publishers and rightsholders, who will otherwise both be negatively affected by bundling.
“The AIMP offers its unequivocal support to the NMPA as they fight this critical battle to prevent Spotify’s scheme from taking effect. We encourage all independent music publishers to join us in this stance and make their songwriters aware of this attack on their livelihood. We cannot allow bundling to become a precedent that can be used to deprive songwriters of their well-earned royalties.
“The AIMP has also been speaking with the Coalition of Concerned Creators and are happy to report that we are aligned on this issue. Please find their statement on this issue below.
“From the Coalition of Concerned Creators:
“All musicians, creator advocacy groups, unions and organizations, and other creator stakeholders — including authors and podcasters — must stand firm against Spotify’s recent policy shift. It is essential to advocate for equitable compensation for music creators, who are pivotal to the industry’s sustainability. Additionally, this is a clear pattern of behavior and we continue to be concerned about Spotify’s bridge into new audio formats, like audiobooks, and how this pattern of behavior will affect other creators, like authors, as well.”
Nashville Songwriters Association International (NSAI)
“Spotify, we are writing regarding Spotify’s decision to ‘bundle’ music with audiobooks, resulting in an estimated annual loss of as much as $150 million in mechanical royalty payments to American songwriters, composers and music publishers. This attempt at lowering royalty payments to an already beleaguered songwriter community is in the worst bad faith and a perversion of the Copyright Royalty Board settlement that the Nashville Songwriters Association International (NSAI), the National Music Publishers Assn. (NMPA) and the Digital Media Assn. (DiMA) agreed to in 2022. It counters every statement Spotify has ever made of claiming the company is friendly to creators.
“‘Bundling’ music with other offerings without a music-only option does not comport with our view of the intent of the Copyright Royalty Board (CRB) in recent Phonorecord procedures in which the NSAI participated. Further, this move negates gains awarded to songwriters by the CRB. NSAI will not accept what we view as an attempt to manipulate the intent of the court through a ‘bundling’ gimmick. NSAI calls for Spotify to immediately reverse its course and offer separate music subscription choices at price points that will fairly remunerate songwriters.
“The American songwriter community is appalled that this is happening while Spotify is reporting record profits, and while founder Daniel Ek has recently cashed in a reported $180 million in stock options, including $118 million that practically coincided with the ‘bundling’ announcement which reduced Spotify’s yearly royalty obligation. The amount Ek cashed in conveniently mirrors the estimated amount that Spotify wants to leech off the back of songwriters who create the product on which streaming services are making billions.
“Reporting record profits while reducing songwriter royalties as the company founder cashed in millions in stocks proves a greedy, offensive and callous disregard for the songwriters on whose backs these revenues are generated.
“Signed unanimously by Nashville Songwriters Association International”
When Bloomberg reported that Spotify would be upping the cost of its premium subscription from $9.99 to $10.99, and including 15 hours of audiobooks per month in the U.S., the change sounded like a win for songwriters and publishers. Higher subscription prices typically equate to a bump in U.S. mechanical royalties — but not this time.
By adding audiobooks into Spotify’s premium tier, the streaming service now claims it qualifies to pay a discounted “bundle” rate to songwriters for premium streams, given Spotify now has to pay licensing for both books and music from the same price tag — which will only be a dollar higher than when music was the only premium offering. Additionally, Spotify will reclassify its duo and family subscription plans as bundles as well.
To determine how great this loss in royalty value would be for the music business, Billboard calculated that songwriters and publishers will earn an estimated $150 million less in U.S. mechanical royalties from premium, duo and family plans for the first 12 months that this is in effect, compared to what they would have earned if these three subscriptions were never bundled. Notably, this change will not impact Spotify’s premium, duo or family pay outs for the first two months of 2024. Bundling kicks in starting in March, so this number refers to losses for the first 12 months after premium, family and duo is qualified as a bundle, not the calendar year of 2024.
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Billboard’s figure was calculated by determining how Spotify’s service revenue, payments to labels, performance royalty rates, and other factors that impact mechanical income are expected to rise each month throughout 2024. These 2024 projections are based on actual numbers pulled from the Mechanical Licensing Collective’s Spotify rate sheets for 2023. For premium specifically, the streamer will pay an estimated $100 million less in the first 12 months bundling is in effect, in comparison to what Spotify was projected to pay in the next 12 months had it never been reclassified.
To be more conservative with the premium-only estimate, if the lost royalty value was calculated purely based on actual 2023 numbers from the MLC, the losses would be around $80 million for the first 12 months, but given all of Spotify’s music service revenue grew by an average of 1.1% every month in 2023, according to Billboard’s calculations, $80 million is almost certainly a low-ball. (A representative for Spotify declined Billboard’s request for comment).
As Spotify grows, the chasm between what payments would have been to songwriters and publishers if premium was counted as a regular standalone service versus what it will be paid now as a bundle with books is expected to increase. According to Spotify’s latest earnings call, the company is growing steadily, up 14% year-over-year for premium subscribers and 20% year-over-year for premium revenue globally.
The lost royalty value for songwriters and publishers could become even larger if Spotify ups the cost of premium to $11.99, which a source close to the matter thinks is possible. It is also possible that this loss could be lessened by how many users change their subscription from premium, duo and family to Spotify’s forthcoming music-only tier, which will pay out in the way that premium did before it was bundled, but this is unlikely to make a significant impact in the estimate of first year losses, considering the tier has yet to be launched and users are automatically renewed on their current plans, even after bundling.
Given there are some unknowns still present, estimates range for lost mechanical royalty value for the first year. One source close to the matter agrees with Billboard’s estimate, also independently calculating that the lost royalty value will total at $150 million in U.S. mechanical royalties for premium, duo and family. Another source calculated somewhere between $140-150 million. A third source says their personal estimate totaled at around $120-130 million at minimum.
This change only impacts the United States, but there are fears that Spotify’s reclassification will have a domino effect worldwide, given other major markets like Australia, Canada, Ireland, U.K. and New Zealand also have audiobooks now included in Spotify premium. Roberto Neri, CEO of the U.K.-based songwriting organization The Ivors Academy told Billboard that “if Spotify gets away with this in the U.S., they will no doubt use it in their future negotiations with European, [Asian-Pacific] and other territories,” and that “what happens in one territory can impact others.”
The National Music Publishers’ Association, which represents U.S. music publishers, said that it would be “looking at all options” to fight back against Spotify’s changes to premium when it was first announced in March, and now that the fight between TikTok and UMG has concluded, it has turned its “full attention” to this issue.
“It appears Spotify has returned to attacking the very songwriters who make its business possible,” said David Israelite, the NMPA’s president and CEO, when the change to premium was first announced. “Spotify’s attempt to radically reduce songwriter payments by reclassifying their music service as an audiobook bundle is a cynical, and potentially unlawful, move that ends our period of relative peace. We will not stand for their perversion of the settlement we agreed upon in 2022.”
Phonorecords IV Settlement
So, how did we get here? It all goes back to the Copyright Royalty Board (CRB), the slate of judges that set the rates for U.S. streaming mechanicals, based on weighing the business interests of publishers, songwriters and services. Unlike the sound recording side of the music business, which decides on their streaming rates based on private, free market negotiations, the publishing mechanicals are highly regulated in the U.S.
Every five years, the NMPA, Nashville Songwriters Association International (NSAI) and members of the Digital Media Association (DiMA), such as Spotify and Apple Music, come together to discuss the rates for the next five-year period; and if no agreement can be reached, then the CRB judges make a determination after a rate trial. In 2022, the three organizations convened about the period of 2023-2027, called “Phonorecords IV” or “Phono IV,” and decided, in an effort to save time and money, to come to a voluntary settlement to present to the CRB judges.
Even though the Phono IV settlement included changes to the way bundling worked (which was considered a concession to streaming services), many in the music business called the settlement as an overall win, especially because the previous five-year rate (Phono III) was fought over for about five years, causing confusion over rates in the interim. When it was announced, the NMPA touted the Phono IV settlement as delivering the “highest rates in the history of digital streaming,” because of its win for a larger headline rate, and many felt it signaled a new era of cooperation between streaming services and the music business. Israelite says now in his statement that Spotify’s latest move to bundle audiobooks “ends our period of relative peace.”
How Bundling Affects Mechanical Revenue
Even though the price of Spotify premium is rising, that additional revenue does not benefit songwriters and publishers. Now that premium is considered a bundled service with audiobooks, some of the subscription price is owed to book publishers and authors to license their works, too.
Mechanical revenue for bundles is calculated by seeing what audiobooks are valued at as a standalone offering ($9.99) and weighing that against the price of the premium bundle offering ($10.99), according to Phono IV. The value of music is found by dividing the total premium price ($10.99) by the two services (audiobooks only and premium) together ($21), which results in music being valued at about 52% of the total bundle, or around $5.70 per subscriber.
How Bundling Affects the Total Content Cost
The first step in calculating the mechanical royalty rate a streaming service owes to songwriters and publishers is to find the “all-in pool.” Streaming generates two forms of royalties for music publishing — performance and mechanical — so this “all-in pool” includes both types. (Performance royalties are determined by a separate, but also U.S. government regulated, process).
The all-in pool is the greater of either the headline rate (which ranges from 15.1% for 2023, 15.2% for 2024, 15.25% for 2025, 15.3% for 2026, and 15.35% for 2027) of Spotify’s music revenue (which is now lowered to around $5.70 per subscriber because of bundling) or the percentage of total content cost (TCC), a.k.a. what royalty Spotify pays to labels.
Previously, Spotify premium qualified for the full rate of the lesser of 26.2% of TCC for the period (or $1.10 per subscriber). Now, after deciding to change its premium offering to include audiobooks, Spotify argues it qualifies as a “bundled subscription offering,” which moves its rate down to 24.5% of TCC for the accounting period.
Regardless of whether the CRB mechanical formula determines all-in royalty pool based on the percentage of TCC or the headline rate, both options are negatively affected by Spotify reclassifying premium as a bundle. According to Billboard’s calculations, every month of 2023 used the headline rate of music revenue as the all-in pool for premium, but after bundling, the next 12 months will use the percentage of TCC as this pool.
After that, the final mechanical royalty pool is determined by subtracting out the performance monies from the all-in pool. This number is weighed against a calculated royalty floor. Whichever is the larger number is the final amount owed to publishers and songwriters for U.S. mechanical royalties.
Last week, Bloomberg reported that Spotify will be raising prices for its premium subscription in five markets later this month and do the same in the United States at an unspecified time later this year. For about $1 to $2 extra per month, depending on the market, premium users will receive audiobooks alongside podcasts and ad-free music listening in their subscription — but the change will have a knock-on effect for mechanical royalty rates for songwriters and publishers.
Once the price increases are launched, all premium subscribers will automatically be subject to the new offering unless they manually change their subscription tier. While the increased price will result in Spotify getting increased revenue, a representative for Spotify believes it also qualifies the popular premium tier for a discount on its royalty rate on U.S. mechanicals because it is now considered a “bundle,” similar to how Amazon bundles Prime and Amazon Music and Apple bundles Apple Music and Apple News.
“Spotify is on track to pay publishers and societies more in 2024 than in 2023,” a Spotify rep said, citing the company’s Loud and Clear report that says the streamer has paid nearly $4 billion to publishers, PROs and collection societies in the last two years.
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“As our industry partners are aware, changes in our product portfolio mean that we are paying out in different ways based on terms agreed to by both streaming services and publishers. Multiple DSPs have long paid a lower rate for bundles versus a standalone music subscription, and our approach is consistent,” the company added. Though Spotify premium users have already gotten access to audiobooks on the service since October for no additional charge, the company clarified to Billboard that its re-classification of the tier as a “bundle” is not retroactive to when it began testing audiobooks but only begins when the subscription price increases.
Music publishers have made it clear they are not going to accept the change without a fight. David Israelite, president/CEO of the National Music Publishers’ Association (NMPA), called out the service for the move, saying that “it appears Spotify has returned to attacking the very songwriters who make its business possible.” He went on to add that the company’s attempt to “radically reduce payments” to publishers and songwriters is “a cynical and potentially unlawful move.” If it is determined that Spotify’s move is not properly categorized as a bundle, the trade organization says it will consider “all options,” including the MLC or publishers taking Spotify to court or before the Copyright Royalty Board (CRB), the entity that sets mechanical royalty rates for streaming in the United States. “We will not stand for their perversion of the settlement we agreed upon in 2022,” he warned.
Nashville Songwriters Association International (NSAI) took to Instagram, urging their followers to cancel their subscriptions: “NSAI, along with the the @nmpaorg, is contemplating our next steps to fight this move. Stay tuned, but in the meantime remember they are doing all this in the worst possible show of disrespect to the songwriters who make them billions.”
Songwriters of North America CEO Michelle Lewis shared the perspective of songwriters, telling Billboard, “We are disappointed, but not surprised, to see Spotify once again on the forefront of finding ways to pay songwriters less. This reclassification, which we see as a deliberate misclassification, dangerously undermines the good faith of the last CRB settlement. It’s also duly noted that it is always the same company leading in this way.”
Phonorecords IV Settlement
Every five years, the CRB reconsiders the royalty rate for mechanicals in the United States. It is a complex, multi-pronged formula, setting the rate that each streaming service must pay to publishers and songwriters based on a number of contingent factors, including the subscription price, the amount the service pays to record labels and more. There are other caveats to consider when setting the rate based on how the user is subscribed with their streaming service, including whether the music was streamed on a free, ad-supported tier or on a paid, premium tier and whether the user is subscribed to the service through a bundle of other products.
In late 2022, NMPA, NSAI and Digital Media Association (DiMA) jointly announced that they had come to a voluntary settlement about what the U.S. mechanical royalty rate would be for the period of 2023-2027 (also called Phonorecords IV or “Phono IV”).
Even though the changes to the way bundling worked were considered a concession to streaming services, many in the music business celebrated the Phono IV settlement as an overall win, especially because the previous five-year rate (Phono III) was fought over for years, causing confusion over rates in the interim. When it was announced, the NMPA touted the Phono IV settlement as delivering the “highest rates in the history of digital streaming,” and many felt it signaled a new era of cooperation between streaming services and the music business. Israelite says now in his statement that Spotify’s latest move to bundle audiobooks “ends our period of relative peace.”
How Bundling Affects Mechanical Revenue
Even though the price of Spotify premium is rising, that additional revenue does not benefit songwriters and publishers. Now that premium is considered a bundled service with audiobooks, some of the subscription price is owed to book publishers and authors to license their works, too.
Mechanical revenue for bundles is calculated by seeing what audiobooks are valued at as a standalone offering ($9.99) and weighing that against the price of the premium bundle offering ($10.99), according to Phonorecords IV. The value of music is found by dividing the total premium price ($10.99) by the two services (audiobooks only and premium) together ($21), which results in music being valued at about 52% of the total bundle, or around $5.70 per subscriber.
How Bundling Affects the Total Content Cost
The first step in calculating the mechanical royalty rate a streaming service owes to songwriters and publishers is to find the “all-in pool.” This is the greater of either the headline rate (which ranges from 15.1% for 2023, 15.2% for 2024, 15.25% for 2025, 15.3% for 2026, and 15.35% for 2027) of Spotify’s revenue (which is now lowered to around $5.70 per subscriber) or the percentage of total content cost (TCC), a.k.a. what royalty Spotify pays to labels.
Previously, Spotify premium qualified for the full rate of the lesser of 26.2% of TCC for the period or $1.10 per subscriber. Now, after deciding to change its premium offering to include audiobooks, Spotify argues it qualifies as a “bundled subscription offering,” which moves its rate down to 24.5% of TCC for the accounting period.
Regardless of whether Spotify calculates its royalties due to songwriters and publishers based on the percentage of TCC or the headline rate, both options are affected by Spotify reclassifying premium as a bundle. One source close to the matter tells Billboard that Spotify has been paying based on the TCC recently.
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.
A new bill designed to increase streaming payouts for artists was introduced in the U.S. House of Representatives on Wednesday (Mar. 6). Titled the Living Wage for Musicians Act, the legislation proposes the establishment of a new royalty fund that would pay artists directly, bypassing labels altogether.
Introduced by Reps. Rashida Tlaib (D-Mich.) and Jamaal Bowman (D-N.Y.), the bill aims to boost artists’ streaming royalty from fractions of a penny up to one penny per stream by way of the new fund. It proposes to fund the additional royalty payments, in part, by mandating the addition of a fee to every streaming subscription equal to 50% of the subscription price — an amount that would be set anywhere between $4 and $10. The bill would also establish a royalty cap for tracks that generate at least 1 million streams per month, with royalties generated by the tracks beyond that number to be divided among all artists.
Notably, the bill would not affect the existing payout model but rather establish a separate fund on top of what artists already receive under the current system.
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“It’s only right that the people who create the music we love get their fair share, so that they can thrive, not just survive,” said Tlaib, who has long advocated for higher royalty payments to artists on streaming services, in a statement.
Damon Krukowski, a member of the band Damon & Naomi (and formerly Galaxie 500) and an organizer for the Union of Musicians and Allied Workers (UMAW), added in a statement, “There is a lot of talk in the industry about how to ‘fix’ streaming — but the streaming platforms and major labels have already had their say for more than a decade, and they have failed musicians.”
The UMAW partnered with the representatives in drafting the act.
It’s unlikely streaming services and top labels will support all of the changes proposed by the bill. Daniel Ek, Spotify’s co-founder/CEO, expressed reluctance for years to raise subscription prices, although they did finally increase in 2023, rising from $9.99 to $10.99. Also likely to be unpopular with streaming services: a mandate that 10% of all of their non-subscription revenue, including from advertising, goes to the fund as a way to further increase payments to recording artists.
Labels and some artists also seem likely to oppose the cap in which the most popular artists share portions of their streaming revenue with the rest of the streaming pool. And labels — which have lobbying power through the Recording Industry Association of America (RIAA) — will also likely challenge the provision that would see artists paid directly from the fund rather than through the labels themselves.
An RIAA representative declined to comment on the bill.