The Legal Beat: Streaming Companies Appeal Songwriters Royalty Increase

With physical album sales down, digital streaming income has become increasingly important for songwriters who have complained bitterly (and with good reason) that they were not getting their fair share. In late 2018 the Copyright Royalty Board (“CRB”) substantially increased royalties for songwriters in a 2 - 1 decision. They also changed the way songwriters receive royalties by streamlining the process. The CRB ruled that it would increase payouts to songwriters by 44% over the next five years.  

 According to the CRB ruling, digital streaming services are now required to pay songwriters and publishers 15.1% of revenue. This is a very substantial increase from the prior 10.5% rate. Songwriters were delighted with the ruling. However, Spotify, Google, Pandora and Amazon all appealed the CRB ruling. Apple was the only major digital streaming service that has not appealed the ruling. Spotify, Google and Pandora stated,“The Copyright Royalty Board (“CRB”), in a split decision, recently issued the US mechanical statutory rates in a manner that raises serious procedural and substantive concerns. If left to stand, the CRC’s decision harms both music licensees and copyright owners. Accordingly, we are asking the US Court of Appeals for the D. C. Circuit to review the decision.”

David Israelite, president of the National Music Publishers Association, stated,“When the Music Modernization Act became law, there was hope it signaled a new day of improved relations between digital music services and songwriters. That hope was snuffed out today when Spotify and Amazon decided to sue songwriters in a shameful attempt to cut their payments by nearly one-third. No amount of insincere and hollow public relations gestures such as throwing parties or buying billboards of congratulations or naming songwriters ‘’geniuses” can hide the fact that these big tech bullies do not respect or value the songwriters who make their business possible.”

Israelite also praised Apple for not appealing the decision and being a friend to songwriters. He further stated that “We will fight with every available resource to protect the CRB’s decision.”

The streaming companies that appealed the decision claim that they were never given an opportunity to discuss the rates the CRB judges decided on before they made their decision.

Bart Herbison, who is the executive director of the Nashville Songwriters Association International, stated, “It is unfortunate that Amazon and Spotify decided to file an appeal on the CRC’s decision to pay American songwriters higher digital mechanical royalties. Many songwriters have found it difficult to stay in the profession in the era of streaming music. You cannot feed a family when you earn hundreds of dollars for millions of streams.”

It remains to be seen how the appellate court will rule on this case. I believe the appellate court should affirm the decision of the CRB and help songwriters earn a decent living.

GLENN LITWAK is a veteran entertainment attorney based in Santa Monica, CA. He has represented platinum-selling recording artists, Grammy-winning music producers, hit songwriters, management and production companies, music publishers and independent record labels.  Glenn is also a frequent speaker at music industry conferences around the country, such as South by Southwest and the Billboard Music in Film and TV Conference.  Email Litwak at [email protected] or visit glennlitwak.com.

This article is a very brief overview of the subject matter and does not constitute legal advice.