Proposed royalty rates from major streaming platforms called into question in the US

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The increasing scrutiny into the streaming industry and its royalty models have reached a new high in the US. This comes after major streaming platforms including Spotify, Pandora, Amazon, Google and Apple submitted their suggested royalty rates for the 2023-2027 streaming period. In the US, this practice takes place every five years when a panel of judges known as the Copyright Royalty Board (CRB) determine the fees artists should be paid by streaming services. 

While they have not been made publicly available, trade group The National Music Publishers’ Association (NMPA) have revealed that the submitted rates are “the lowest royalty rates in history,” prompting backlash from the group. “Not only do they propose rolling back rates and terms to erase all gains over the last 15 years, but they actually are proposing a structure worse than at any point in the history of interactive streaming,” revealed David Israelite, president and CEO of NMPA

The current approved rate has been uncertain. In 2018, the CRB approved a rate of 44% but this was appealed by Spotify, Google, Amazon and Pandora on the grounds of insufficient notice. The appeal was successful. In response, the NMPA have proposed the following model:

  • 20% percentage of revenue; or
  • 40% of what record labels and artists receive; or
  • $1.50 per subscriber; or
  • $0.0015 per play

The streaming industry has been consistently called into question lately. In the UK, the government recently ordered an inquiry into the market dominance of major streaming platforms and music labels. A study is currently underway to determine if further investigation is required.