Major DSP Songwriter Payment Proposals to Begin in 2023 are Now Public

The once private proposals from the major streaming companies for their future songwriter royalty payments are now public.

With the 2017 royalty statutes expiring in 2022, the streaming payouts for 2023-2027 are now the subject of heated legal debate between the US Copyright Royalty Board, digital service providers such as Spotify, Apple, Amazon, Pandora, and Google, and musician advocacy groups such as the NMPA.

One of the most impactful numbers in the royalty payout calculation for DSPs is known as the headline rate, which refers to the portion of a DSP’s annual revenues paid to songwriters.

The rate has previously been set by the US Copyright Royalty Board at 15.1%, and the NMPA is now requesting that the headline rate be increased to 20%. Spotify, Amazon and Google all appealed this raise.

Spotify, Apple, Pandora, and Google, have all countered the raise, proposing a return to a previous headline rate of 10.5%, except for Amazon Music which proposed 10.54%. 

Musician advocacy groups are further concerned with transparency surrounding the revenue figure used to calculate the headline payment. NMPA CEO David Israelite and Executive Director of the Nashville Songwriters Association International Bart Herbison are addressing the issue by advocating for additional revenue streams to be built into the deal.

One of these payment plans would be a Total Cost of Content (TCC) percentage which would require DSPs to pay publishers at least a set percentage of what they pay to the labels. The rates for TCC have been the subject of much debate, as the US Copyright Royalty Board ruled to increase TCC percentage by ~1% each year from 22% in 2018 through 2022 until it hit 26.2%.

Amazon’s proposals get even more complex, forgoing TCC for “an all-in floor of 80 cents per subscriber per month for the standalone portable tier, and 40 cents per subscriber for the less-expensive non-portable tier”, among other revenue streams.

The Music Modernisation Act, which was signed into law on October 11, 2018 through the US House and Senate with unanimous support, obligates the US Copyright Royalty Board’s 2023-2027 royalty rates mandates to use the “willing buyer, willing seller” standard to ensure a fair arrangement.

Currently, there’s still work to be done before the two parties are able to reach a willing consensus.