{"id":199229,"date":"2024-04-18T18:06:12","date_gmt":"2024-04-18T17:06:12","guid":{"rendered":"https:\/\/www.musicbusinessworldwide.com\/?p=199229"},"modified":"2024-05-03T17:16:18","modified_gmt":"2024-05-03T16:16:18","slug":"nmpa-accuses-spotify-of-attacking-songwriters-as-it-changes-how-it-pays-mechanical-royalties-in-the-us","status":"publish","type":"post","link":"https:\/\/www.musicbusinessworldwide.com\/nmpa-accuses-spotify-of-attacking-songwriters-as-it-changes-how-it-pays-mechanical-royalties-in-the-us\/","title":{"rendered":"NMPA accuses Spotify of &#8216;attacking songwriters&#8217; as streaming service changes how it pays out mechanical royalties in the US"},"content":{"rendered":"<p>In 2022, the Copyright Royalty Board (CRB) accepted a (near) music <a class=\"link-internal\" href=\"https:\/\/www.musicbusinessworldwide.com\/can-you-feel-the-love-tonight-spotify-and-fellow-music-streamers-strike-agreement-with-publishers-for-15-35\/\" target=\"_blank\" rel=\"noopener\">industry-wide settlement<\/a> to improve songwriters\u2019 streaming royalty rates in the United States from January 1, 2023.<\/p>\n<p>The settlement \u2013 known as \u2018Phonorecords IV\u2019 or \u2018CRB IV\u2019 \u2013 will see songwriters and music publishers paid a headline rate of <strong>15.35%<\/strong> of a given interactive streaming service\u2019s US revenue <strong>by 2027.<\/strong><\/p>\n<p>That rate is being \u2018phased in\u2019, because \u2018Phonorecords IV\u2019 covers the five-year period between 2023 and 2027:<\/p>\n<ul><li>In 2023 (starting January 1), songwriters and music publishers were to be paid a headline rate of <strong>15.1%<\/strong>\u00a0of a US service\u2019s revenue;<\/li><li>in 2024, this increased to <strong>15.2%<\/strong>;<\/li><li>in 2025, it will increase to\u00a0<strong>15.25%<\/strong>;<\/li><li>in 2026 it will increase to\u00a0<strong>15.3%<\/strong>;<\/li><li>and in 2027 it will reach\u00a0<strong>15.35%<\/strong>.<\/li><\/ul>\n<p>The deal also included a number of changes to other components of the rate, including increases to the per-subscriber minimums and the \u201cTotal Content Costs (TCC)\u201d calculations which reflect the rates that services pay to record labels.<\/p>\n<p>The agreement (you can <a href=\"https:\/\/www.musicbusinessworldwide.com\/files\/2022\/12\/2022-28316.pdf\" target=\"_blank\" rel=\"noopener\">read it in full here<\/a>) also included a provision about how streaming services treat <strong>bundles <\/strong>i.e. that they would pay a lower rate for bundles versus stand-alone music subscriptions.<\/p>\n<p>This is all-important context behind some news from Spotify today (April 18).<\/p>\n      <div class=\"mb-advert__incontent\">      <div class=\"mb-advert mb-advert__tweeny hidden-xs hidden-ms hidden-sm\" data-loaded=\"no\" data-sizes=\"992 1200 1440\" data-name=\"628x90 Sponsor banner #5 (992+1200+1440)\" data-params=\"dfp_sponsor5_628\" id=\"dfp_sponsor5_628\"><\/div>      <div class=\"mb-advert mb-advert__banner mb-advert__banner--inline hidden-xs hidden-sm hidden-md hidden-lg\" data-loaded=\"no\" data-sizes=\"480\" data-name=\"468x60 Sponsor banner #5 (480)\" data-params=\"dfp_sponsor5_468\" id=\"dfp_sponsor5_468\"><\/div>      <div class=\"mb-advert mb-advert__mobile mb-advert__mobile--inline hidden-ms hidden-md hidden-lg\" data-loaded=\"no\" data-sizes=\"320 768\" data-name=\"300x50 Sponsor banner #5 (320+768)\" data-params=\"dfp_sponsor5_300\" id=\"dfp_sponsor5_300\"><\/div>      <\/div>      \n<p>Spotify has confirmed that a big change has arrived to the way it pays out mechanical royalties in the US, as it now considers its <strong>Premium<\/strong> plans to be &#8216;<strong>bundles<\/strong>&#8216; \u2013 because they combine audiobooks and music.<\/p>\n<p dir=\"ltr\" role=\"presentation\">Treating Premium (including Individual, Duo, and Family) as a bundle rather than a standalone subscription impacts how the company pays mechanical royalties to songwriters and publishers in the US.<\/p>\n<p dir=\"ltr\" role=\"presentation\">In short: The rate now paid for <strong>Spotify&#8217;s Premium <\/strong>plans is <em>lower<\/em> than the headline rate for a standalone subscription agreed with publishers as part of the CRB IV proceedings.<\/p>\n<blockquote>\n<p dir=\"ltr\" role=\"presentation\">&#8220;Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.\u201d<\/p>\n<p dir=\"ltr\" role=\"presentation\"><span style=\"color: #000000\">Spotify spokesperson<\/span><\/p>\n<\/blockquote>\n<p>A Spotify spokesperson said today (April 18): &#8220;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.<\/p>\n<p>&#8220;Multiple DSPs have long paid a lower rate for bundles versus a stand-alone music subscription, and our approach is consistent.\u201d<\/p>\n<p class=\"p1\">      <div class=\"mb-advert__incontent\">      <div class=\"mb-advert mb-advert__spu\" data-loaded=\"no\" data-name=\"300x250 Sponsor MPU #1\" data-params=\"dfp_spu1\" id=\"dfp_spu1\"><\/div>      <\/div>      <\/p>\n<p>The move has raised the ire of the US-based National Music Publishers Association (NMPA), which represents prominent independent publishing companies, as well as major publishers, <a class=\"link-relationship\" style=\"background: 0px 0px;color: unset !important;text-decoration: none;border-bottom: 1px dashed #ff7d00\" title=\"Companies &gt; Sony Music Publishing [770 articles]\" href=\"https:\/\/www.musicbusinessworldwide.com\/companies\/sony\/sony-music-group\/sony-music-publishing\/\">Sony Music Publishing<\/a>,\u00a0<a class=\"link-relationship\" style=\"background: 0px 0px;color: unset !important;text-decoration: none;border-bottom: 1px dashed #ff7d00\" title=\"Companies &gt; Universal Music Publishing Group [388 articles]\" href=\"https:\/\/www.musicbusinessworldwide.com\/companies\/universal-music-group\/universal-music-publishing-group\/\">Universal Music Publishing Group<\/a>\u00a0and\u00a0<a class=\"link-relationship\" style=\"background: 0px 0px;color: unset !important;text-decoration: none;border-bottom: 1px dashed #ff7d00\" title=\"Companies &gt; Warner Chappell Music [703 articles]\" href=\"https:\/\/www.musicbusinessworldwide.com\/companies\/access-industries\/warner-music-group\/warner-chappell-music\/\">Warner Chappell Music<\/a>.<\/p>\n<p>\u201cIt appears Spotify has returned to attacking the very songwriters who make its business possible,&#8221; NMPA President &amp; CEO David Israelite told us earlier today.<\/p>\n<blockquote><p>&#8220;Spotify\u2019s 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.&#8221;<\/p>\n<p><span style=\"color: #000000\">David Israelite, NMPA<\/span><\/p><\/blockquote>\n<p>He added: &#8220;Spotify\u2019s 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.<\/p>\n<p>&#8220;We will not stand for their perversion of the settlement we agreed upon in 2022 and are looking at all options.\u201d<\/p>\n<p class=\"p1\">      <div class=\"mb-advert__incontent\">      <div class=\"mb-advert mb-advert__spu\" data-loaded=\"no\" data-name=\"300x250 Sponsor MPU #2\" data-params=\"dfp_spu2\" id=\"dfp_spu2\"><\/div>      <\/div>      <\/p>\n<p>Audiobooks have been <a href=\"https:\/\/www.musicbusinessworldwide.com\/spotify-gives-premium-subscribers-access-to-150000-audiobooks-and-15-hours-free-listening-per-month\/\" target=\"_blank\" rel=\"noopener\">bundled in<\/a> with Spotify Premium since October.<\/p>\n<p>Last month, SPOT announced the <a href=\"https:\/\/www.musicbusinessworldwide.com\/spotify-unveils-standalone-audiobooks-tier-for-free-users-priced-at-9-99-month\/\" target=\"_blank\" rel=\"noopener\">launch<\/a> of a<strong> $9.99<\/strong> per month standalone audiobooks tier aimed at its free users. (Prior to Spotify&#8217;s Premium music and audiobooks bundle, the platform treated discounted Premium plans tied up with the likes <a href=\"https:\/\/support.spotify.com\/us\/article\/hulu-showtime-premium\/\" target=\"_blank\" rel=\"noopener\">of HULU<\/a> as bundles.<\/p>\n<p>Earlier this month, <em>Bloomberg<\/em> first reported that Spotify is <a href=\"https:\/\/www.musicbusinessworldwide.com\/spotify-to-hike-prices-again-introduce-new-subscription-tier-report\/\" target=\"_blank\" rel=\"noopener\">increasing the price<\/a> of its Premium Individual and Duo &amp; Family plans by $1 and $2 per month, respectively. These price rises will take place in the likes of the UK and Australia by the end of April and in the US later this year.<\/p>\n<p>According to <em>Bloomberg&#8217;s<\/em> report, Spotify is also planning to launch a new \u201cBasic\u201d tier that will offer music and podcasts, but not audiobooks.<\/p>\n<p>The so-called Basic tier will be priced at the current price of the Premium individual subscription: <strong>$11 per month<\/strong>, and &#8216;Basic-tier&#8217; subscribers will have to pay additionally for any audiobook listening time.<\/p>\n<p>MBW understands that this &#8216;<strong>Basic&#8217; <\/strong>music tier will not be considered a bundle by Spotify but rather treated as a standalone subscription that will pay the agreed headline mechanical rate to songwriters and publishers.<\/p>\n<p dir=\"ltr\" role=\"presentation\">Spotify claimed in a statement on Thursday that, globally, the company \u201cis on track to pay publishers and societies more in 2024 than in 2023&#8243;.<\/p>\n<p dir=\"ltr\" role=\"presentation\">Spotify reports in its Loud and Clear <a href=\"https:\/\/loudandclear.byspotify.com\/#takeaway-6\" target=\"_blank\" rel=\"noopener\">report<\/a> that it paid out nearly $4 billion globally to publishing rights holders \u2013 who represent songwriters \u2013 over the last two years.<\/p>\n<p dir=\"ltr\" role=\"presentation\">The company said in February that it <a href=\"https:\/\/www.musicbusinessworldwide.com\/spotify-paid-out-9-billion-to-music-rightsholders-in-2023-equivalent-to-63-of-its-annual-revenues\/\" target=\"_blank\" rel=\"noopener\">delivered<\/a> <strong>USD $9 billion<\/strong>\u00a0last year to recipients across record companies <em>and<\/em> music publishers, plus independent distributors, performance rights organizations, and collecting societies.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>SPOT now considers its Premium plans to be &#8216;bundles&#8217; \u2013 because they combine audiobooks and music<\/p>\n","protected":false},"author":15,"featured_media":162804,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7],"tags":[],"class_list":["post-199229","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/199229","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/comments?post=199229"}],"version-history":[{"count":0,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/posts\/199229\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media\/162804"}],"wp:attachment":[{"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/media?parent=199229"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/categories?post=199229"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.musicbusinessworldwide.com\/wp-json\/wp\/v2\/tags?post=199229"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}