Streaming services like Spotify and Apple Music might be about to get more expensive, thanks to a decision from the Copyright Royalty Board. The CRB, which determines how much songwriters and music publishers are paid by streaming services, handed down a ruling early Saturday that boosts the amount of revenue songwriters and publishers will receive by 50%.
The decision is seen as a blow for Spotify, Apple, Google, and Amazon, who banded together to fight the case brought by the National Music Publishers’ Association and the Nashville Songwriters’ Association International.
The Copyright Royalty Board, a panel of three judges, make and interpret rules related to the collection of royalties. Under CRB rules in force for the last decade, the royalties paid by streaming services to songwriters and music publishers has adhered to a strict formula: 10.5 percent of streaming service revenues was paid to writers and publishers, effectively preventing them from negotiating free-market deals for their work.
The CRB decision today changes two key things. Firstly, the revenue-sharing rate has been increased to 15 percent, nearly a 50% pay increase for writers and publishers. Secondly, writers and publishers will now either be paid that 15 percent rate, or alternatively, the total content costs. Writers and publishers will be paid whichever is greater, and since content costs are negotiated between labels and streaming services, the decision provides some free-market upside to writers and publishers, while preserving a minimum that needs to be paid regardless.
“We are thrilled the CRB raised rates for songwriters by 43.8% – the biggest rate increase granted in CRB history,” NMPA CEO David Israelite told Variety. “Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.”
For streaming services, the decision will likely mean higher content costs, which is bad news for an industry that has become increasingly competitive in the last few years. Spotify, the largest paid streaming service, has been trying to improve its bottom line in anticipation of an IPO, while Apple, Google, and Amazon have all expanded their streaming efforts considerably in the last two years.