This op-ed is jointly signed by the advocacy organizations the Songwriters of North America (SONA), the Black Music Action Coalition (BMAC), and the Music Artists Coalition (MAC).
If you love songwriters and hate the many ways songwriters are underpaid, paid slowly, or not paid at all, please read the following: There is between $700-$800 million of mechanical-royalty income related to songs that were streamed between 2018 and 2022 that has not been paid — and there is no guidance on when it will.
Why? Eyes down.
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The Mechanical Licensing Collective (“MLC”) is an organization responsible for receiving mechanical royalties from streaming services, matching the royalties for songs to the appropriate songwriters, and distributing that income to songwriters and publishing companies accordingly. The MLC is currently holding $373 million dollars in mechanical royalty income for songs streamed between 2018 and 2022.
In simplest terms, the MLC can’t distribute this money because the mechanical royalty rate for that period still has not been finalized.
The statutory rate for mechanical royalties is set every five years by the Copyright Royalty Board (“CRB”). This rate hadn’t moved very much in decades; however, in a 2018 proceeding before the CRB that is known (anachronistically) as Phonorecords III, songwriters and publishers finally received an increase to the compulsory mechanical royalty rate, from 11.4% to 15.1%, for the 2018-2022 period. Four streaming services appealed this decision, causing a long and expensive back-and-forth in the courts. Finally, in July of 2022, the increased rate was preliminarily upheld — the decision was heralded as a long-awaited win to songwriters. In addition to the royalties held by the MLC, if these preliminary rate increases are finalized, streaming services will owe hundreds of millions in royalty payments to songwriters for those past periods.
In total, finalizing the Phonorecords III rates could lead to additional payments of up to $700-800 million in royalties.
Unfortunately, it has been a hollow victory for songwriters thus far. For the monies to be released, the CRB must publish a final determination on the mechanical royalty rate for the 2018 to 2022 period. Once it is set, streaming services will have six months to report and pay the MLC additional royalty payments based on the increased rate. The CRB, presumably dealing with other important matters, has still not issued its final determination. Obviously, this is frustrating, but it is especially painful in a time of economic uncertainty and heightened inflation. Mechanical royalties are a critical source of revenue for songwriters, particularly as streaming has become the dominant format for music distribution.
Failure to receive the full royalties due for songs streamed between 2018 and 2022 negatively impacts every aspect of the songwriting economy. Songwriters rely on mechanical royalty income to support themselves and their families and ensure they can continue to create music for a living and build their careers. Music publishers use this revenue to sign new songwriters, acquire music catalogs, and provide advances to creators. These layered uncertainties impacts proper compensation and investment in songwriters’ creative works, futures, and the entire industry.
Most importantly, the livelihoods of songwriters are on the line.
We at SONA, MAC, and BMAC ask all songwriters and supporters to take the following actions in order to ensure that songwriters are paid and paid without more delay.
- First, help yourselves by ensuring your publishing splits and writer information are accurately submitted, allowing your money to be properly matched and searchable by the MLC.
- Second, sign our call-to-action letter to let the three CRB judges know how important it is to songwriters that the Phonorecords III final decision is issued.
There are sexier problems than “legal inertia,” and there are no villains here – just three hardworking judges with full dockets. But this standstill shines a glaring spotlight on the lack of access songwriters have into a process that is so central to our abilities to make a living, in which the only recourse we have is to band together until we reach a loud enough critical mass that our voices can be heard within the hallowed halls of the judicial system. It is our job as songwriters ourselves and songwriter advocates to let the judges know clearly-yet-respectfully how crucial this final determination is for the most vulnerable members of the music community.
