Many readers participated in the Physical and Download Mechanical Rates Survey that various organizations have sent to their members over the last few weeks. Here are the results of the main questions for which we had 361 respondents who self-selected their participation. (Other answers included comments which we chose not to publish for privacy reasons.).
The results suggest that participants were mostly informed songwriters who had never been asked before what they thought about the issues in the Copyright Royalty Board. We would have to conclude that any of our regular readers would be a bit skewed toward knowledgeable because between the Trichordist, MusicTechPolicy, ARW, Hypebot and Celebrity Access we were probably carrying a very high percentage of the available information on the frozen mechanicals issues.
It also is striking how few respondents said they had ever been asked what they think about any mechanical rates (physical, download, streaming), an important and easily measurable issue. This is something to add to the learning from this episode. It may be that our data is skewed, but even so we didn’t expect that 68% would say they’d never even been asked their opinion. An easy way to find out what people think about something is to ask them.
Thanks for the HUGE response to the songwriter survey on what you think the new unfrozen mechanical rate should be!! The response has been so strong we’re going to keep the survey open so more of you can participate.
This Survey Monkey questionnaire is anonymous and easy to take–3 minutes to complete–and you could really help a lot by giving your opinions on what you think the rate should be! We will post the results so everyone can see.
After all the effort and achievement by our great audience in support of songwriters getting paid fairly in the #FrozenMechanicals crisis, we are finally coming to where the rubber meets the road and trying to decide how much songwriters should get paid by record companies selling music in three ways (called “configurations”):
permanent downloads, like iTunes and Amazon;
vinyl discs, like you buy in record shops on Records Store Day;
and compact discs (CDs).
We’re expecting the final proposal to get made in a matter of days, and we thought it would be good to start with a short Survey Monkey questionnaire to get an idea of what this audience thinks. We’re collaborating with a number of songwriter organizations to distribute the questionnaire to their members and friends.
All the data will be anonymous and will be released when the questionnaire is done!
The plan is to get some more evidence of what we all think about a few core pricing ideas, thanks to the awesome Copyright Royalty Judges who have rejected extending the 16 year freeze in response to comments from the public and objections by George Johnson, the only songwriter in the Phonorecords IV proceeding.
The upshot of the Judges’ ruling rejecting the extension of the frozen rates is that both George Johnson as a participant and a host of commenters brought up many valid points about problems with the settlement. I suppose the next step will be for the Judges to either set rates themselves and let the parties react to them or ask the parties to resubmit a new proposal in line with the Judge’s ruling.
Either way, the settlement is rejected and we have to thank the Judges who listened thoughtfully, George Johnson who toils alone representing himself (and the independent songwriter’s view) as an actual participant in the proceeding, and all the songwriters, independent publishers, lawyers and songwriter groups who took the time to comment. And of course a huge thank you to all the Trichordist readers who supported fairness and justice and all the heartfelt comments against frozen mechanicals.
The wheels of justice turn slowly, but they do turn. Don’t forget it–the price of liberty is eternal vigilance.
Here is the Judges conclusion:
Rightsholders are free to choose their representation in these proceedings. Admittedly, individual songwriters and self-publishers have traditionally chosen not to expend the resources necessary to participate in these proceedings at the same level as trade organizations and major technology companies. Nonetheless, the outcomes of these proceedings can have a significant impact on the lives of the individual rightsholders. In this proceeding, the Judges received lengthy comments from SGA, which claims to represent thousands of songwriters. For SGA’s comments to have independent influence, however, SGA would have needed to join the proceeding as a participant. Nonetheless, with regard to the present proposed settlement, the comments of non-participants cumulatively served to amplify those of the objecting participant.
Pursuant to section 801(b)(7)(A)(ii), based on the totality of the present record—including the Judges’ application of the law to that record, as well as GEO’s objections, which, as noted supra, are consistent with the non-participant comments—the Judges find that the proposed settlement does not provide a reasonable basis for setting statutory rates and terms. Furthermore, the Judges find a paucity of evidence regarding the terms, conditions, and effects of the MOU. Based on the record, the Judges also find they are unable to determine the value of consideration offered and accepted by each side in the MOU. These unknown factors, as highlighted in the record comments, provide the Judges with additional cause to conclude that the proposed settlement does not provide a reasonable basis for setting statutory rates and terms.
The hearing on Groundhog Day (Feb. 2) for the American Music Fairness Act (or “AMFA”) was a fantastic opportunity for artists to be heard on the 100 year free ride the government has given broadcast radio. We know it went well because the National Association of Broadcasters sputtered like they do when they’ve got nothing to say.
But what’s really hysterical was how they talked out of both sides of their mouths in two different hearings–which makes you think that NAB president Curtis LeGeyt was doing his impression of Punxsutawney Phil. Yes, when it came to broadcasters getting paid by Big Tech, the broadcasters wanted their rights respected and to be paid fairly. But when the shoe was on the other foot, not so much. In the Senate, the NAB asked for more money for broadcasters in a hearing for the Journalism Competition and Preservation Act–to protect the mega radio broadcasters from the mega tech oligarchs. And if broadcasters don’t get more money, they want to be exempt from the antitrust laws so they can pull their content. Just like artists do to them…NOT.
Then the NAB comes over to the House Judiciary Committee–on the same day being Groundhog Day–and asks the government to continue their 100 year free ride. We call bullshit.
The AMFA witnesses didn’t ask for an antitrust exemption, like the broadcasters did. They simply asked that recording artists be granted similar copyrights as others.
They didn’t ask for more money, like the broadcasters did. They simply asked for at least some payment, since they now receive none when broadcast radio stations air their music.
They didn’t ask for special treatment, like the broadcasters did. Rather they asked that they be treated the same as all other artists around the world, and even the same as artists on virtually all other media platforms in the U.S.
And they didn’t ask for rigts to negotiate and withhold content, like the broadcasters did. Under AMFA, radio stations would still be allowed to play music as they please. Artist advocates simply asked that the biggest-of-the-big stations pay a modest royalty set according to market rates. Stations making less than $1.5 million per year would pay a flat, annual royalty of $500 (less than $1.40 per day) for as much music as they choose to air. And the smallest stations’ payments would drop all the way down to $10.
No station is going to go bankrupt over these royalties.
Huppe has a very strong point here. This legislation has been picked over for years. AMFA bends over backwards to protect community radio and small broadcasters and repects everyone’s contribution to radio’s success.
But that’s the point–it respects everyone‘s contribution.
We want Trichordist readers to now how much we appreciate your commitment to artist rights and especially your long-term support for the #IRespectMusic campaign. You were there early and your support has never wavered. But it’s time to step up once again!
It’s time to tell Congress we are still here and we still want them to make this happen. It’s fair and it’s the right thing to do. As Blake Morgan asked in a viral blog post in The Hill:
We musicians are used to fighting. For our livelihoods, our families, our dreams. In recent years we’ve fought battles we’ve neither sought nor provoked, against powerful corporate forces devaluing music’s worth. Streaming companies, music pirates, and AM/FM radio broadcasters who, in the United States, pay nothing––zero––to artists for radio airplay.
It’s shocking, but true: The United States is the only democratic country in the world where artists don’t get paid for radio airplay. Only Iran, North Korea, and China stand with the United States in this regard.
Broadcasters make billions of dollars each year off our music, and artists don’t earn a penny. This impacts not only the artist, but session musicians, recording engineers, songwriters. Virtually everyone in music’s economy.
Isn’t being paid fairly for one’s work a bedrock American value?
The super-consolidated U.S. broadcast radio monopolies represented by the National Association of Broadcasters shillery has fought fair treatment for all recording artists since the dawn of radio. Thanks to the voices of fans and artists from around the United States, fair pay for radio play has become a local issue, and Congress is responding.
In the mean time, please sign the petition at #IRespectMusic and let your Member of Congress know you support the bill and want to bend the arc of the moral universe to fight artist exploitation. Please tell your friends, share on your socials and with your fans!
You can read the bill here, and if you want to drill down, you can watch this in-depth video on the issues sponsored by Texas Accountants and Lawyers for the Arts, I Respect Music Austin, Austin Music Foundation, SoundExchange, Austin Texas Musicians and Artist Rights Watch.
Copyright Royalty Board 37 CFR Part 385 [Docket No. 21–CRB–0001–PR (2023–2027)] Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV)
Interim Chief Copyright Royalty Judge Suzanne Barnett Copyright Royalty Judge Steven Ruwe Copyright Royalty Judge David R. Strickler US Copyright Royalty Board 101 Independence Ave SE Washington, DC 20024
SECOND REOPENING PERIOD COMMENTS OF ABBY NORTH, ERIN MCANALLY AND CHELSEA CROWELL
To Your Honors:
Thank you for the opportunity to submit additional comments, now that the details of the Memorandum of Understanding (MOU4) apparently related to the Subpart B mechanical rate settlement negotiated by the NMPA, NSAI and three major labels have been made available.
Only the NMPA’s 300 or so publishers are potential parties to the MOU, assuming the opt in terms are the same as those of MOU3 (http://nmpalatefeesettlement.com/mou3/faq.php). The publishers that opt in to the MOU4 settlement will receive money for their participation, and in exchange for this money, the NMPA Board members have agreed to freeze the Subpart B mechanical rate at the $.091 rate that’s been in place since 2006.
In this exchange, NMPA publishers have a stream of revenue (the MOU4 money) that offsets the negative effect of the lack of rate increase in the Subpart B mechanical.
Although foreign CMOs could opt into the current MOU3 settlement, rightsholders that are not NMPA members may not opt in and will not receive the buffer that the MOU4 money provides, yet they are subject to the frozen mechanical rate that is an apparent condition of the negotiation related to the proposed settlement of the Subpart B rates and terms.
Thousands, if not tens of thousands of songwriters in the world have songs published or administered by those NMPA publishers that are party to the rate freeze settlement, but neither these songwriters nor the vast number of songwriters around the globe were given a say in the decision to freeze the mechanical rate.
The concern we have is not that there is a settlement. The concern is that the settlement does not provide for a base rate greater than $.091, plus annual increases to adjust for inflation.
To quote the NMPA’s Supplemental Comments: “…mechanical royalties from Subpart B configurations now constitute only a small part of total mechanical royalty revenue in the U.S., and that share is expected to get smaller during the period covered by this proceeding.”
That concept only resonates with a corporation that aggregates thousands or millions of copyrights.
To an individual songwriter or a small rightsholder, it doesn’t matter if Subpart B mechanicals constitute 1% or 15% or 50% of total royalties. Why? Because every single penny counts.
When an individual is paying a mortgage, tuition or a car payment, every single penny counts. When a health crisis occurs, every penny counts. When existing off the very low streaming royalties generated by even a hit song, every penny counts.
Physical and download mechanicals are still an extremely relevant revenue stream to individual songwriters and small publishers.
At the current retail price of $.99 for a download, the $.091 mechanical is 9.2%.
The streaming royalty pool for songs is roughly 10.5% of the total, possibly as much as 15.1%, per the CRB III hearing results (after all this time, still under appeal). The NMPA has suggested an increase of the streaming royalty rate to 20%. This would be an exceptional improvement.
How is the download royalty not at least the same percentage as the streaming royalty?
Why is the value of a downloaded song less than that of one that is streamed?
We suggest the Subpart B rate and the streaming mechanical rate (based on percentage) should be on no less than a most favored nations basis with one another.
To songwriters and most publishers, every royalty type and every revenue stream matters. The move from physical to digital, the unbundling of albums in favor of singles and the unlivable streaming royalty rates absolutely substantiate the need for an increase in Subpart B mechanicals, at least to reach the percentage paid on the streaming side, and with periodic adjustment for inflation. 3
We appreciate the opportunity to submit these additional comments, and we ask the Judges to recognize that songwriters and small publishers are individuals who do not have the luxury of collecting royalties from the aggregation of hundreds of thousands of works.
It is not fair that songwriters signed to the NMPA publishers have a frozen mechanical rate forced on them, and it is remarkably egregious that non-NMPA publishers and their writers are also forced into this horrible reality.
Abby North, North Music Group LLC Chelsea Crowell, Songwriter Erin McAnally, Songwriter/Factory of Strange Tones
It is absolutely accurate that the streaming services are pushing for abysmal rates and terms in Phono IV. Some services like Amazon, Pandora and Spotify actually advocate to a return of the rates and terms from prior rate setting “wars” in Phono I (2006) and II (2011). Others, like Apple, suggest applying the rates and terms that are determined by the CRB in Phono III – which, mind you, covers 2018-22, and is being litigated simultaneously despite 2022 commencing in two months – because what an awesome system is this Copyright Royalty Board! Nevertheless, there is something that has been conveniently omitted from each of these media articles: “the why.” Why are the services proposing the “lowest rates in history?” What justification do the services provide for their positions? Unfortunately, the answer is not as simple as the streaming services playing the role of “the villains” in the “war” for songwriters’ livelihoods.
When you download the hundreds of pages of the services’ written direct testimony from the CRB, and wade through the arguments in the mire of heavily redacted passages, there is a surprising common theme used to bolster every last one of their positions: the proposed settlement by the NMPA, NSAI and the three major labels to freeze rates for physical product like vinyl and permanent downloads (the Subpart B configurations) (see here: https://app.crb.gov/document/download/25288).
Simply put, every service used the NMPA and NSAI proposed settlement for physical as a benchmark to support their abysmal rates on streaming. Surprised? Me, too. But for reference I’ve included some excerpts from the services’ filings at the end of this post.
More disturbing, they should have seen this coming a long way off because they got called out for doing essentially the same thing in Phonorecords III. For context, when there was a lull in the pace of Phono IV, I began delving through the filings in the Phono III remand. Much to my unsurprise, an expert witness for Pandora in that proceeding, Professor Michael Katz, foreshadowed the current debacle. Not only did he use the physical settlement to make the case that the streaming mechanicals rate in the 2012 settlement was a ’good benchmark,’ but also, even more disastrously, used this argument to rationalize the 2012 rate being too high in testimony filed on April 4, 2021. Chris Castle referred to this issue as the “Streaming Royalty Backfire:
“If you want to argue that there is an inherent value in songs as I do, I don’t think freezing any rates for 20 years gets you there. [Physical mechanical rates were first frozen at 9.1¢ in 2006.] Because there is no logical explanation for why the industry negotiators freeze the rates at 9.1¢ for another five years, the entire process for setting streaming mechanical rates starts to look transactional. In the transactional model, increased streaming mechanicals is ultimately justified by who is paying. When the labels are paying, they want the rate frozen, so why wouldn’t the services use the same argument on the streaming rates, gooses and ganders being what they are? If a song has inherent value—which I firmly believe—it has that value for everyone. Given the billions that are being made from music, songwriters deserve a bigger piece of that cash and an equal say about how it is divided.”
The proposed settlement did not just open Pandora’s Box, it also opened Spotify’s, Google’s, Amazon’s and Apple’s boxes (don’t mind me, I’m Greek and enjoy every opportunity to make mythology references). So, when posed with the question, “why advocate for this settlement to freeze,” even following the filings of the services, the NMPA’s David Israelite provides the following commentary (heard most recently during last Wednesday’s Town Hall via zoom):
(1) he refers to folks who articulate this concern as professional critics who like to blog from their couches, and that there’s a lot of misinformation going around;
(2) the NMPA has previously (as far back as Phono I) tried to press for an increase to no avail after spending millions of dollars; and
(3) the NMPA wishes to focus efforts on the streaming services as they do not wish to fight multiple fights at once and potentially risk the labels proposing an even lower than 9.1 cent rate.
To respond to this commentary — first, it is difficult to believe the major labels would propose a lower than 9.1¢ rate if the publisher negotiators did not cave if for no other reason that the willing buyer and the willing seller standard ought to work the other way, too. However, if anyone has evidence to support this “labels will screw us” rationale, please reach out to me and I will immediately withdraw that premise. Notwithstanding, even in the hypothetical event that the labels counter with a lower than 9.1 cent rate, is it not the job of the prime representative of the “copyright owners” at the NMPA and NSAI to firmly state that this rate has been frozen for nearly 20 years and no longer will “we” (including their sister publishers) stand by this? In response to the other two points, I understand that I have spent no money in these proceedings and that I do not have the resources to do much more than write about this from the couch in my apartment in Austin, Texas. But, for what it is worth, I believe that an important part of advocacy is being open to critique, listening and learning – even if it is something that you do not wish to hear.
Speaking of, the buried lede is that the CRB has reopened the public comments on the proposed settlement to freeze physical mechanicals – the CRJs are at least willing to listen and learn. Maybe they don’t think we’re couch commenters.
Now, I do not believe in presenting a laundry-list of problems without proffering potential solutions, and luckily, there is a solution that is entirely within the control of the parties that settled: withdraw the proposed settlement to freeze the mechanical rates for Subpart B configurations. Go to the labels and negotiate a voluntary increase. Submit that increase proposal to the CRB. This act will not only bring the entire songwriter and music publisher communities together, but it will also serve to extinguish one of the services’ key benchmarks in their testimony.
While we’re on the topic of strategies, I want to end on one note. Now is not the time to pit what artists are earning from digital radio in relation to what songwriters are earning ( see here: https://variety.com/2021/digital/opinion/digital-radio-guest-column-david-israelite-nmpa-1235092330/ ). One of the great things about working with songwriters in Texas happens to be that many are also recording and performing songwriter/artists. Thus, they value the rates from digital radio that are applied to recording artists, and they welcome the victory achieved by SoundExchange in Web V (which resulted in a rate increase plus index of rates in accordance with inflation — which seems wiser by the day and winter is coming).
Instead, it is time for the focus to be on achieving the best possible results in Phono IV by expanding the revenue stream, not taking money from others which only benefits the services.
THE RECEIPTS: Petard-Hoisting Excerpts from the Services’ Testimony
(Note: PDD = “permanent digital downloads,” and WBWS = the “willing buyer willing seller” standard which the Copyright Royalty Judges (CRJs) are to use as the basis for determining rates in this proceeding, pursuant to the Music Modernization Act.)
The Copyright Royalty Board has announced its decision on webcasting rates under §114 for 2021-25 and it’s good news for non-featured artists, featured artists and sound recording copyright owners. The rates are set for 2021, paid retroactively to January 1.
New Rate Per Performance 2021
Old Rate Per Performance 2020
Noncommercial Webcaster (Non-educational)
$1000 per station or channel up to 159,140 Aggregate Tuning Hours/month Overage at $0.0021 per performance
$500 per station or channel up to 159,140 Aggregate Tuning Hours/month. Overage at $0.0018 per performance
Per-station: +100% Overage: +17%
After 2022, these rates are adjusted by the Consumer Price Index (CPI-U for the geeks).
The Copyright Royalty Judges shall adjust the royalty fees each year to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index for All Urban Consumers (U.S. City Average, all items) (CPI-U) published by the Secretary of Labor before December 1 of the preceding year.
So it is clear that the CRB can come up with reasonable rates when they’re asked. It’s also a great example of the power of strong bargaining groups including SoundExchange, the unions, indie and major record companies, and a broad cross-section of music users.
Rates for noncommercial educational webcasters, satellite radio, audio for business establishments and some others — are decided in a different process. Their 2021 rates for these service are on the SoundExchange website.