Royalty increase for songwriters – US ruling

Songwriters received royalty payments of 10.5% last year. The ruling now states that songwriters will receive 11.4% of the revenue generated by a song in 2018. This number will incrementally go up every year and be capped at 15.1% by 2022.

“This is the best mechanical rate scenario for songwriters in US history, which is critically important as interactive streaming continues to dominate the market,” National Music Publishers Association (NMPA) CEO David Israelite said in a statement.

The ruling was the result of a dispute between the NMPA and various streaming services.

Israelite said last year that songwriters were being taken advantage of. He said services such as Spotify, which is planning to come to South Africa soon, were not paying songwriters and publishers what they deserved. Spotify said it paid 70% of its revenue towards royalties of which 10% was dedicated to songwriters and publishers.

Compared to Spotify, Apple Music is not expected to be drastically affected by the policy change since the company operates on various fronts such as software, electronics, financial services and music publishing. Spotify on the other hand conducts its business solely through streaming and any major shake-up could spell financial trouble for the Swedish operation.

Apple Music’s subscription fee will likely remain the same. If Spotify’s user fees go up, it’s likely that Apple Music will capitalise on the opportunity.

Spotify European comms director Alison Bonny said the company would not comment on the matter when Music In Africa made queries about the possible implications of the ruling on Tuesday.

Major record labels will now be paid $3.82 for every $1 that goes to a songwriter. Record labels were previously paid $4.76.

“While an effective ratio of 3.82 to 1 is still not a fair split that we might achieve in a free market, it is the best songwriters have ever had under the compulsory licence,” Israelite said.

Sony/ATV Music Publishing CEO Martin Bandier said: “While we are disappointed not to get the per-stream rate that we wanted, the planned rate increases go a long way to fairly compensate our songwriters for the essential contribution they make to streaming's success story.”