On Wednesday afternoon (Aug. 31), the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI) and the Digital Media Association (DiMA) announced a landmark agreement for the Phonorecords IV Proceeding, resulting in higher mechanical rates for songwriters.
The agreement set the mechanical streaming rates in the U.S. for the years 2023-2027. The headline royalty rate will be set at 15.35%, which will be phased in over the five-year term. Now that the Mechanical Licensing Collective is fully operational, it will help deliver commission-free royalty payments, as set forth by the Music Modernization Act (MMA).
According to the NMPA, the deal also includes a number of changes to other components of the rate, including increases to the per-subscriber minimums and the “Total Content Costs (TCC)” calculations which reflect the rates that services pay to record labels.
In addition to NMPA and NSAI, this agreement was supported by DiMA member companies, Amazon, Apple, Google, Pandora, and Spotify.
Of the news, NMPA President & CEO David Israelite says, “This historic settlement is the result of songwriters making their voices heard. Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed. We thank the digital services for coming to the table and treating creators as business partners. Critically, since this is a percentage rate, we know that as streaming continues to grow exponentially, we will see unprecedented value of songs.”
NSAI Executive Director Bart Herbison adds, “This collaborative process will lead to increased songwriter compensation from digital streaming companies and locks in our historic 43.8% increase from the previous CRB proceeding. Along with the upward rate momentum there are also new structures to help ensure minimum payments.”
“This agreement represents the commitment of the streaming services to bringing the best music experiences to fans and growing the streaming ecosystem to the benefit of all stakeholders, including the creative foundation of songwriting,” sums DiMA President and CEO Garrett Levin. “For streaming services, this moment presents an opportunity to pursue new collaborations with publishers and songwriters in the context of economic certainty that will support continued innovation. Perhaps more than anything, this agreement demonstrates the potential for industry progress when parties come to the table for good faith discussions.”
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