Songwriters Groups Submit Final Submission for Review of U.S. Record and Download Royalty Rates

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By Chris Cooke | Posted on Thursday, November 25, 2021

An assortment of organizations representing songwriters in America and beyond – led by the Songwriters Guild of America, the Society of Composers & Lyricists, and Music Creators North America – have submitted some final comments to the US Copyright Royalty Board regarding its review. mechanics. royalty rate charged on discs and downloads sold in the US market.

When labels release physical discs, they usually own or control the copyright to the sound recording on those discs, but they must obtain a license covering the rights to the songs that accompany them, which will be owned or controlled by one or more. several music publishers or songwriters. The label specifically needs a mechanical rights license, and in most countries this is available through the collective licensing system, with industry standard tariffs applicable.

However, in the United States, it works slightly differently. There is a compulsory license covering mechanical copying of songs, which means that the price paid by the label is set by the CRB. The label can rely on this license and this price on condition that it goes through a defined administrative process.

From time to time, the CRB reviews these rates, and such a review is currently underway. Earlier this year, the National Music Publishers Association and the Nashville Songwriters Association International told CRB that they had struck a deal with record companies that would see the mechanical royalty rate on physical releases (and, in fact, downloads too) remain unchanged. So that would mean a rate of 9.1 cents per copy.

However, groups like SGA, SCL and MCNA criticized the proposals, arguing that the 9.1 cent rate was set in 2006 and that inflation alone meant an increase was now warranted. They also argued that since the largest members of NMPA – i.e. the major publishers – are also the largest customers of this license through their label divisions, the organization professional is fundamentally in conflict of interest.

Following this, these other songwriting groups wrote to CRB in May, stressing that they – as interested parties – had the right to comment on this review and the NMPA / NSAI proposals. After the NMPA and NSAI filed a motion asking the CRB to formally adopt their label agreement, the copyright council officially announced that it would accept contributions from other organizations, the deadline for making these submissions being set for July 26.

SGA, SCL and MCNA et al took this opportunity to make a submission, criticizing the NMPA / NSAI agreement with the labels and setting out the arguments why the mechanical royalty rate should, in fact, be increased.

They also pointed out that while physical sales in the recording industry may now be eclipsed by revenue from streaming, records and downloads still accounted for 16% of US record industry revenue last year. Additionally, the ongoing vinyl revival and recent interest in NFTs – which are often download related – means that there remains a great deal of interest in the music formats covered by this compulsory license.

After the July 26 deadline expired, the CRB then said it would allow submissions until August 10. Some have speculated that the extension was requested by the majors who wanted the opportunity to respond to the arguments put forward by SGA, SCL and MCNA. The majors certainly took advantage of the extension and sent in another submission on August 10.

Subsequently, in October, SGA, SCL and MCNA asked if they could submit any new information they had gathered that was relevant to the royalty review. And so the CRB opened the submissions again, this time with a deadline of November 22. That’s why SGA, SCL and MCNA made another final submission this week, primarily responding to comments made by the majors in their August submission.

This final submission makes four key points.

First, he states: “We strongly oppose the position of major publishers and record labels that submissions from interested and non-participating commentators do not need to be taken into account by CRB in evaluating the performance. ‘adoption of privately negotiated settlements’. This claim, they say, is “against the letter and spirit of US copyright law.”

Second, they reiterate their argument that the CRB should take inflation into account when revising mechanical royalty rates, so that a new rate is set that takes into account inflation since 2006, and that they update annually based on future inflation.

Such a move, they say, “would recognize both the grave financial dangers posed to songwriters and composers by the period of inflation in which we are now living, and the clearly resurgent importance to independent music creators and artists. music publishers royalty income from physical product distribution, downloads and other… setups [covered by this particular compulsory licence]”.

Third, they point out that the NMPA / NSAI proposal is opposed by “an overwhelming percentage of US and global songwriters and composers,” while noting that freezing mechanical royalties on records and downloads could actually have an impact. even wider. This is because streaming services are using this proposed royalty freeze to justify their argument that the mechanical royalty rate they pay (which is also governed by a compulsory license in the United States) should also be frozen (or even reduced), despite the fact that the review of NMPA royalties is pushing for an increase.

And finally, the submission says, “We enthusiastically support the continuation of CRB’s calls for comments to interested parties in appropriate circumstances during all future stages of the process. [this and other royalty rate reviews]. This will help ensure that more voices of music creators are heard by the CRB, other than the extremely narrow constituency of opinions provided only by those whose participation major music conglomerates are willing to fund ”.

Once this final submission is presented, it remains to be seen how the CRB will take a stand on all of this.



LEARN MORE ABOUT: Copyright Board | Music Creators North America | Society of Composers and Lyricists | Songwriters Guild of America