Negative Royalty Checks: Streaming Service Appeal Makes it Real Possibility

Billboard has reported that streaming services have won their appeal to force the Copyright Royalty Board to recalculate songwriter streaming royalties for 2018-2022. Yes, that means retroactively calculate 2 1/2 years of royalties.  This could easily lead to songwriters getting reduced or negative royalty checks.

Here is how:

In 2017 the royalty rate per stream for songwriters was calculated by dividing 10.4% of gross streaming service revenue by the total number of streams.  In 2020 it is calculated using 13.3% of gross streaming service revenue by the total number of streams.  If streaming services like YouTube and Spotify get their way that 13.3% will be reduced dramatically.  Let’s say streaming services manage to get the Copyright Royalty Board judges to reduce it retroactively to 10.4%.  Spotify and  YouTube would back out the overpayment from songwriters future royalty checks.  Remember Spotify has already done this once when they claimed they overpaid on family subscriptions.

Example: suppose you earned exactly $1000 per quarter over the last 2 1/2 years, or $10,000.  Streaming services could contend that they “overpaid” you 28% each quarter.  They would be within their rights to back out $2,800 from your next checks.  Negative royalty checks. Expect that in late 2020 or early 2021 just when your BMI royalties will shrink from the pandemic induced collapse in local advertising.

Now various industry and trade operatives are trying to spin this ruling as just a technical setback. That the Copyright Royalty Board used a flawed process to calculate songwriter royalty rates. The recalculation is no big deal. They would have you believe that streaming services spent millions of dollars on a federal appeal to get the same rate, to pay songwriters the same amount of money.  Does that make any sense to you?  Do not be fooled by this exercise in covering their ass.  It is unlikely that songwriters rates will remain the same.   The purpose of the exercise is to get lower rates and these lower rates will come retroactively out of your checks.

You have to wonder what kind of people work at these streaming services.  What kind of person is fully on board with a corporate policy to claw back pay from workers, when those workers have already lost most of their live music income.  I urge anyone that knows employees of these three companies (Google, Amazon and Spotify) to publicly out/shame these individuals. Force them to denounce their companies regressive and inhuman policies. Shun them from polite society.  Further any artists still cooperating with the digital services like Spotify, Amazon and YouTube should be regarded as strikebreakers and scabs. These artists should be treated accordingly.  Artists should pull new releases from streaming services that are pursuing this policy.

This is war.

About Dr. David C Lowery

Platinum selling singer songwriter for the bands Cracker and Camper Van Beethoven; platinum selling producer; founder of pitch-a-tent records; founder Sound of Music Studios; platinum selling music publisher; angel investor; digital skeptic; college lecturer and founder of the University of Georgia Terry College Artists' Rights Symposium.