Does the Copyright Royalty Board Now Care About Musicians?
8 min read

Does the Copyright Royalty Board Now Care About Musicians?

Hello, hello hello. Hope folks are staying cool this hot summer. Today is my only newsletter of the month, then back to regular programming on September 7th. If you enjoy this newsletter, recommend it to a friend, and if you’re feeling really generous, you can click here to subscribe. Again, I won’t write any additional newsletters, due to the amount of work each of these takes to produce, but it’s a fine way of supporting this work. But enough on me, let’s check in on our friends in the Library of Congress, the Copyright Royalty Board.

Last year, I wrote a brief history of the Copyright Royalty Board, the three-person board that determines payouts under statutory licenses. The jurisdiction of an increasingly non-insignificant amount of record industry revenue is controlled by a government body tucked within the Library of Congress. The board creation in the mid-00s steamed out record labels squeezing publishers in how deals were done with still nascent forms of digital music. Early cases in front of the board involved litigating payouts for ringtones and early download/streaming platforms, which while pulling in millions of dollars, certainly didn’t overlook streaming what’s now the biggest chunk of record and publishing revenue with streaming. Repeatedly, the board’s history reveals those particular roots with record labels often winning out against publishers, but in 2022 that dynamic is shifting.

In late March, the Copyright Royalty Board threw out the previous 9.1 cents mechanical royalty rate for physical and digital sales in an early ruling for Phonorecords IV. This represented not only a win for songwriters but stood directly against the National Music Publishers Association and other songwriter groups that were more than fine accepting of the previous status quo. It was those trade organizations that accepted the status quo of an unmoved royalty rate against the pleas of independent songwriters, organizations, and concerned industry professionals. Those outside voices included comments from Blake Morgan, David Lowery, and Helienne Lindvall, which you can read here, who were able to help push the board in making this reversal of a decade-plus of precedent.

The shock of the decision could be seen across industry reactions where suddenly there was far more pushback against the NPMA, who despite holding the loudest megaphone for “songwriters”, never fought for this reform. The irony wasn’t lost on the likes of Chris Castle over at the Music Technology Policy blog, who along with the attorney Gwendolyn Seale, had been fighting for this change without the bully pulpit afforded to David Isrealite, the CEO of the NMPA, or many other songwriter organizations. The board’s about-face would soon be repeated.

Right before the Fourth of July holiday weekend, the CRB announced that it reached a final ruling on Phonorecords III. Now let me repeat what I said on the case last year: “In early 2018, the CRB announced an increase in mechanical and performance royalties for streaming platforms in non-interactive streams (i.e. Spotify radio, Pandora, etc.), also known as Phonorecord III. The new rates were meant to apply between 2018 and 2022, and while initially met with approval from the National Music Publisher Association (NMPA), streaming companies were less keen on the sudden hike. What’s ensued over the last few years is a rather public back-and-forth, with the likes of Spotify, Amazon, Google, and Pandora filing lawsuits against this CRB ruling that they feel is too costly.”

Songwriters again are about to see their payouts from their work increase. The board upheld an increase to the mechanical streaming royalty rate from 10.5% to 15.1% representing an over 40% increase for songwriters. There was a trade-off with streaming platforms getting a deal on “bundled services” and a couple of other details but the affirmation of the increase was a vital win for songwriters who will see a retroactive pay bump head their way. Again the consistent lobbying and fighting by various songwriters can be credited to some degree in helping secure this increase. Again the NMPA took a victory lap with the news despite representing organizations, the major publishers, that helped perpetuate this broken status quo for songwriters.

Still, what’s frustrating about this particular step forward is that it took nearly five years to reach its full conclusion. Now streaming platforms did extract certain concessions here, but I’d be so curious to know how much is saved through these concessions versus the protracted legal battle that proceeded. Anyway, Garrett Levin (who, like a number of folks mentioned in this newsletter I’ve met and chatted with over the last couple of years) over at Billboard penned an op-ed that mentioned a number of reforms that could be shared by streaming platforms and songwriters (updating outmoded contracts, user-centric streaming, clearer data, etc.). The impact of these suggestions can be debated amongst these groups but it’s hard not to see that across the table there’s growing frustration at the complicated, opaque, and tedious process that unfolds in front of the CRB every few years.

There’s a clear model to follow here in the work done by the likes of Blake Morgan, David Lowery, Helienne Lindvall, Gwendolyn Seale, Chris Castle, and more to not let the Copyright Royalty Board off the hook to address these issues. Even when political fights can feel amorphous and obtuse, these folks are actively fighting to make this process more democratic. And when the amount of money at stake is in the millions of dollars, that’s more than worth paying attention to and following.

Right now the CRB is adjudicating Phonorecord IV, which will determine the mechanical rate from 2023 to 2027. Uniform agreement around these issues isn’t to be expected but the protracted dance between the NMPA and streaming platforms only helps major record labels. This oft-ignored elephant in the room enjoys not taking the spotlight about degraded songwriter pay, while their junior halves on the publishing side via the NMPA can hem and haw about how streaming platforms without meaningfully challenging them. Meanwhile, streaming platforms, especially in a more fraught economic moment within the technology sector, may not be willing to write large blank tickets to these labels and could push back more down the road on deals that aren’t adjudicated by the federal government. Everyone can continue to fight for their best interests but in the currently preserved status quo, it's the major labels that continue to win.

Unheard Labor

In July, the United Kingdom’s Competition and Markets Authority released its initial report looking at the health of the recorded music business. Unfortunately, the report centered on “consumer health” and though its findings highlighted low artist pay, the constant invocation of artists easily being able to share their music was credited for why the government wouldn’t be needed to aid them. Representatives from various unions and advocacy groups weren't too happy about the report and I’d agree. Though I can elaborate deeper another day, the ability to upload one’s music onto Spotify shouldn’t be confused with a meaningful way for an artist to potentially make a living or even reach a real audience with their work. Still, the UK government isn’t done examining the industry, so hopefully what arrives next isn’t so blinded by certain narratives of industry success.

Across the pond in the United States, Michigan congresswoman Rashida Tlaib introduced a resolution (the text can be found here) to create a new streaming-specific royalty for featured and non-featured performers to be paid directly by streaming platforms. Broadly I’m not against trying to get major platforms like Spotify to pay more for artists, still, the resolution is in its early stages; but if you’d like to show your support, you can contact your local house representative here. I’m very curious about this resolution’s future so I’m sure I’ll be talking about this again.

A Note of Financialization

It’s been months since we’ve gotten wind of a company raising money to buy up song assets but the drought is over. The Carlyle Group, who you might remember from such pop cultural moments as Scooter Braun’s buying of Taylor Swift’s recorded catalog and aiding with the civil war in Yemen, raised $500 million to create Litmus Music to get into the old song asset purchase trade. I’m so curious as to when the talks for this company began and how raising all of this money went but I’m sure some intrepid reporter will inform the eager public (me) desperate to know. Harbourview Equity Partners purchased the catalogs of country acts Brad Paisley and Lady A; the billion dollars Apollo Global Management raised needs to go somewhere. Reservoir Media got the recording and publishing rights for the drummer Matt Sorum, who's been in bands including The Cult, Guns N’ Roses, and Velvet Revolver.  

Concord Music, after numerous attempts by Michigan Retirement Systems to sell, the company is back on the buyers' markets by picking up the Australian and New Zealand publisher Native Tongue. Even though MRS wasn’t able to get $6 billion, $5 billion, or $4.5 billion for the massive publisher, I’m sure spending $50,000,000 million on this company will lure another suitor whenever the economic climate improves. Exceleration Music bought the catalog of Heroic Music Group, an independent primarily electronic music label. BMG truly isn’t paying attention to any concerns about a slowdown in the song asset market and bought Telamo, Germany’s largest independent music publisher. Staying in Germany the publisher ROBA and the AP Music Royalties Fund, seriously who/what is this, bought the publisher GERIG, which was founded after WWII.

Here’s a quick history lesson: The Blackstone Group bought SESAC, the for-profit performing rights company, back in 2017. Two years later, Entertainment One spent $215 million on Audio Network, a music production company for television, advertisements, and you know whatever else involves moving pictures. Then last year, Blackstone paid $385 million for eOne Music last year buying it from Hasbro, the toy conglomerate, which included Audio Network. Now Bloomberg is reporting that SESAC is offering “whole-business securitizations” (i.e. bonds) valued at $335 so it can purchase the Audio Network and pay back Guggenheim Securities, who previously helped lead another bond sale from SESAC in 2019. My head is spinning a bit from this but I’m sure one of y’all more fully understands this. Oh yeah, Hipgnosis, who partnered with Blackstone to buy up song assets is also making bonds with its catalogs, cause Blackstone’s only got one financial trick up its sleeve.

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