When Amazon, Google, Pandora and Spotify appealed against new, higher songwriter royalty rates set by the US Copyright Royalty Board (CRB), it sparked fury in the publishing community. Get set for another outbreak: the US Court of Appeals in D.C. has reportedly knocked back the rates, backing the DSPs’ argument.
It’s not a ruling on the rates themselves, but rather on the procedure used to arrive at them, with the main bone of contention being the CRB’s method of taking parts from different experts’ models for how the rates should be set, which the DSPs argued had “incompatible structures, made different assumptions, and used entirely different data inputs”.
The appeals court’s ruling hasn’t yet been ‘unsealed’ (made public) but Billboard reported that it has backed the DSPs.
So what happens now? The rates, which cover ‘mechanical statutory royalties’ for songwriters in the US from streaming, will have to be set again by the CRB, using a different procedure for the calculations.
So, it does NOT necessarily mean they’ll be lower – the appeals court wasn’t ruling on the numbers, but rather the procedure used to arrive at them – but it does mean that when the ruling is unsealed, there’s likely to be another outbreak of criticism of the DSPs from publishers and songwriters.
It’s also awkward timing. The CRB’s new rates covered the five-year period from 2018 to 2022, but early next year it’ll be time to start fighting (sorry: participating in the rate-setting process) all over again, for the five-year period after that.
The ‘CRB IV’ process, covering 2023-2027, kicks off on 5 January 2021, with the National Music Publishers Association already having signalled its intention to push for even higher royalties in that.
Yet it seems quite possible that we still won’t have a finalised set of 2018-2022 rates at that point. It’s a recipe for an angry 2021, but remember: this isn’t just about tensions between songwriters/publishers and streaming services, but also about the long-simmering question of why recordings (i.e. labels) get a much bigger cut of streaming royalties than songs (i.e. songwriters/publishers) do.