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News / Ioná Corrêa / 02 Sep 2022

Streaming services set royalty rates for next four years

5 minute read

After an intense and very long legal battle over the streaming rates for the years 2018-2022, a new settlement has been announced between streaming services and the National Music Publishers’ Association, the Nashville Songwriters Association International and the Digital Media Association. The new agreement between the parties has settled certain mechanical streaming rates in the U.S. at 15.35% for the years 2023-2027.

These numbers are surprising, however, since the NMPA has been pretty vocal about its intentions to push for a 20% rate for the period in question. According to Variety’s sources, however, both sides have made concessions that have led to all parties being satisfied with the new figures. These concessions most likely regard modifications to elements beyond the headline rate, such as the treatment given to bundles and per subscriber minimums.

This settlement means that both streaming services and music publishers can now stay clear from another intense, long and extremely expensive legal battle – which, again sources told Variety, both sides were eager to avoid. The previous fight, centered around the rates of the years 2018-2022, continued on for more than three years and cost several million dollars in legal and other fees.

The announcement states that several changes to other components of the rate are included in the new agreement, like increases to the per-subscriber minimus and the calculations of the Total Content Costs (TCC), which reflect the rates paid to record labels by the streaming services. The treatment that is given to bundles is also going to be put through some changes, – as well as the ways in which services are allowed to offer incentives to attract new subscribers – though specific details have not yet been provided.

The announcement states that the new deal, which is supported by the NSAI’s Board of Directors and the NMPA Board as well as entities like Amazon, Apple, Pandora, Google, DiMA member companies and Spotify, “ensures that all parties will benefit from the growth of the industry and will be motivated to work together to maximize that growth.”

CEO David Israelite, who is also the president of NMPA, stated: “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.”

Though the NMPA had previously given signs of aiming toward a 20% royalty rate, it appears that all parties involved decided that compromising ahead of time would be the better option for the next few years.

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