Songwriters to receive a pay raise from streaming services

On Saturday, January 28, 2018, U.S. copyright authorities announced that songwriters will get a pay raise from streaming services. Streaming services account for the largest shares of music industry sales in the U.S., while global streaming sales jumped 60% in 2016.
The Copyright Royalty Board of the U.S. Library of Congress issued a written decision that changed the formulas used to determine how much of their revenue streaming companies must share with songwriters and the music publishing companies they typically hire to collect licensing fees on their behalf. They approved a 43.8% increase in streaming royalties paid to songwriters and their publishers over the next 5 years. Overall, the percentage of the streaming services' revenue paid to songwriters will increase from 10.5% to 15.1%.

Here are the rates for the next 5 years:

Songwriters and Composers Royalty Rates:

  • 2018  11.4%  of revenue
  • 2019  12.3% of revenue
  • 2020 13.3% of revenue
  • 2021  14.2% of revenue
  • 2022 15.1%  of revenue

These licensing fees are typically paid to music publishing companies which collect fees on behalf of recording artists in exchange for a commission. 

Mechanical Royalties:

  • 2018   22.0% of total content cost
  • 2019   23.1%  of total content cost
  • 2020  24.1%  of total content cost
  • 2021   25.2%  of total content cost
  • 2022  26.2%  of total content cost

Streaming services must pay a fee, known as a mechanical license every time a user listens to a song. U.S. law requires the Copyright Royalty Board to set the rates for these mechanical licenses, rather than letting publishers negotiate rates with streaming services. 

A bill called the Music Modernization Act (MMA) has been introduced to the U.S. Congress which would create a new government agency to issue license to digital services and collect and distribute royalties tot he holder of the digital rights.