From Billboard · Kristin Robinson · · 3m
Songwriter Streaming Royalties Battle Intensifies
Streaming services and songwriters clash over U.S. mechanical royalty rates after Spotify and Amazon cut payments by half.
In brief
Streaming services and songwriters clash over U.S. mechanical royalty rates after Spotify and Amazon cut payments by half. Spotify and Amazon reduced songwriter royalties by 50% using bundle pricing, costing $500 million in lost revenue since 2024. Originally reported by Billboard.
U.S. Mechanical Royalty Rates Under Review
The Copyright Royalty Board sets mechanical royalty rates for streaming services in the U.S. for a five-year period starting 2028.
Mechanical Royalties Make Up Half of Streaming Income
Mechanical royalties account for roughly half of the money songwriters earn from streaming services globally.
Phono IV Settlement Ended in 2027
A peaceful settlement in Phono IV set mechanical royalty rates from 2023 to 2027 before the Copyright Royalty Board could begin a trial.
Spotify and Amazon Cut Royalties Overnight
Spotify and Amazon reclassified their Premium and Unlimited plans as bundles to cut mechanical royalty payments to songwriters by about half.
NMPA Reports $500 Million Loss Since 2024
The National Music Publishers Association estimated Spotify and Amazon’s moves cost songwriters and publishers $500 million in lost royalty value since Spring 2024.
NMPA and NSAI Demand Market-Based Rates
The National Music Publishers Association and Nashville Songwriters Association International argue services should not receive rates below what a free market negotiation would provide.
Songwriters Coalition Proposes $0.0030 Per Stream
A coalition of independent songwriters and musician rights groups wants a simple rate of $0.0030 per stream with annual cost-of-living adjustments.
Spotify Wants Phono IV Rates to Continue
Spotify asks for the Phono IV settlement rate of 15.35% to continue and the bundling definition to remain unchanged.
Apple Music Supports Phono IV Rates
Apple Music argues the Phono IV settlement should continue as the benchmark for Phono V with the headline rate at 15.35%.
Amazon Music Proposes Lower Rates
Amazon Music wants the headline rate lowered from 15.35% to 13.4% of revenue and reduced rates for free and bundle services.
Pandora Wants Late Fee Clarifications
Pandora supports continuing Phono IV rates but wants to stop the current system for public domain songs and add an overpayment late fee.
Google Requests Allocation Clarity
Google wants clearer rules for allocation when a service involves both licensed and non-licensed activities like audio books and podcasts.
Phono V Trial Begins in 2027
The Copyright Royalty Board will start a trial in spring 2027 to determine the fairest mechanical royalty rate for 2028-2032.
Spotify and Amazon’s Move Costs $500 Million
Spotify and Amazon’s reclassification of Premium and Unlimited plans as bundles cut mechanical royalties by half, costing songwriters $500 million since 2024.
The big picture
Spotify and Amazon reduced songwriter royalties by 50% using bundle pricing, costing $500 million in lost revenue since 2024.
