Negotiations over rights to streaming services are one of the most complex, controversial, and most significant battlefields in the contemporary music industry, pitting some of the world’s largest companies – Amazon, Apple, Google/Alphabet, Pandora/SiriusXM/Liberty Media and Spotify – against music publishers. and production companies.
It’s controversial that even as the battle over 2023-27 rates approaches later this year, 2018-22 rates haven’t been set: In 2018, the Copyright Board, which sets rates for publishers but not labels, decided that they must pay Streaming services approximately 44% more in copyright. In 2019, the four streaming services appealed that decision, arguing that they were already paying billions of dollars in royalties and such an increase would make their business models unacceptable. (Apple, the world’s second-largest streaming service, is fighting this battle.) They asked that the increase come from the nomenclature quota; The three major brands also own the top three publishers, and needless to say they are not interested in voluntarily taking millions of dollars from one business unit and transferring them to another rather than amassing more – an unlikely premise dubbed “heroic presumption” in sessions and documents.
Stuck in the middle of it all is the songwriter – the primary creator of the music at the center of this battle – who unexpectedly ended up bottoming out on the totem pole of the broadcast economy.
Countless millions of dollars in legal fees and lobbying fees later, a decision is expected in 2018-22 – officially called Phonorecords III – in the coming days, and according to documents obtained by diverse, It seems that streaming services do not expect to be successful.
Streaming services have appealed to CRB for more time to push this potential increase – and have been harshly criticized by five US senators in a letter obtained diverse, which expressed its “grave concern about any requests that would delay important and necessary royalty payments to copyright holders and [oppose] No grant from the Copyright Office for an extension. “
This last talk began with a six-page letter to General Counsel and Associate Registry of Copyright dated June 1 on letterhead of Latham Daniels—a law firm working on behalf of the Digital Licensee Coordinator, which represents music-streaming services—in which a five-point argument for delaying Retroactive payments that Phonorecords III may incur to ensure that “royalties continue to flow to copyright holders with minimal disruption and that any price changes for prior periods of time are processed efficiently and effectively.”
His arguments include issues such as “the price period straddl[ing] two entirely different statutory licensing regimes, “two modifications necessary under current temporary regulations, given the amount of time that has elapsed below the final rates and terms,” “limitation of liability in 17 USC § 115(d)(10)” and the like, and concluded that “We have serious concerns about being able to do all of this for each reporting category – simultaneously – within the time stipulated by the regulations.”
Instead, it proposes “a pause in the timing of the retrospective adjustment to the prior year (for example, for 2021 annual reports under blanket license, and for matching and non-conforming license period reports) while the office establishes rules for gathering input from the entire industry on challenges involved It shall amend the reports for those prior periods, along with the wording proposed for that purpose.
Not surprisingly, the National Association of Music Publishers launched an equally long letter objecting to the request for streaming services, which was followed three days later in a letter to the Copyright Register on June 16 from Senators Tom Telles (R-NC), Mazie Hirono ( D-HI), Marsha Blackburn (R-TN), Bill Haggerty (R-TN) and Sheldon Whitehouse (D-RI).
Describing the matter as an “issue of paramount importance to creators,” it states that “the exceptional demand for streaming services comes after a four-year period during which the decision of third audio recordings was appealed as DLC member companies sought to reduce their royalties to songwriters,” in An indication of a request for services to return to the lower rates set by Phonorecords II. “All this time, the DLC members have been aware that if their efforts fail, they will be responsible for making payments to the songwriters.” In other words, they knew that this day was coming.
She continues: “Digital music companies are some of the largest and most sophisticated global technology companies. Their concerns about the operational challenges arising from a potential third phone records decision, a decision they have appealed and sued for years, must be viewed in the context of the vast resources they can assemble to address those challenges. Also looking at their interests in comparison to songwriters, who, as small businesses or individual creators, are the most vulnerable parties in the music ecosystem…. Accordingly, we ask that you decline the DLC request and ensure that if late royalties are due, they are paid in a timely manner for the songbook.
The senators’ rhetoric inaccurately portrays the situation as a David and Goliath struggle between songwriters and tech giants — and songwriters are in fact largely represented by the billion-dollar music companies that own the publishing companies, which take in a large proportion of those companies. Royalties It seems that the music divisions of these tech giants do not require a business model.
Having said that, streaming services have had nearly four years to prepare for a large retroactive payment, and to file such an application with the Copyright Office less than a month before it is due would certainly be considered short-sighted.
Broadcasting services representatives, Daniel Latham and the NMPA did not immediately respond diverseComment requests.
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