Making a living as a songwriter is difficult, unless you are one of the few who pen consistent hits. With streaming taking over consumption, songwriters have complained that the payouts from streaming are drastically lower than what they used to be and don’t pay a living wage. Many of these rates are controlled by government rulings and over the weekend, U.S. songwriters got a big win by the Copyright Royalty Board, which ruled to raise songwriter rates for interactive streaming by nearly 50% over the next five years.
Also important from the ruling helped strengthen and simplify the way songwriters get paid mechanical royalties.
Songwriters according to Variety were looking for a per-stream rate, but in a battle against streaming services that wanted an even lower rate, they managed to come out with more, though not the exact per-stream rate. The new rate will have a floor and be based on two factors: a percentage of revenue or total content costs. The content costs are payments to labels, which are negotiated without guidance from the government. Also any caps on writer rates are now eliminated.
“We are thrilled the CRB raised rates for songwriters by 43.8% – the biggest rate increase granted in CRB history,” NMPA president and CEO David Israelite said. “Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.”
The new rate is effectively $3.82 to the label and $1 to the writer/publisher.
Songwriters argued that the existing system where streaming services grow market share at a loss to promote other products does not suit the songwriters and artists that these services depend on.
The court also ruled that streaming services would have to pay a late fee if they aren’t paying songwriters on time.