The long-running arguments about the streaming economy have often focused on the slice of the pie that goes to publishers, and the impact streaming has had on the earnings of songwriters.
So, excuse us for seizing the chance to report on something positive: hundreds of millions of extra dollars in royalties flowing to those two communities.
This is all about ‘Phonorecords III’ in the US: publishing streaming royalties from the period 2018-22. The rates for those royalties were infamously only finalised until August 2023 after a long and bitter battle between publishers and DSPs.
Because those final rates were higher than the interim rates that had been used, the streaming services underpaid rightsholders – to the tune of just under $419.2m according to the Mechanical Licensing Collective (MLC) which has been overseeing the process of calculating the shortfall.
Good news, fans of complicated royalties calculations! There’s a twist in this tale: an overpayment of $28.8m during the period 2018-20. So, the windfall (well, let’s be accurate: the rightful royalties) coming to rightsholders and then on to songwriters – is around $390.3m, although there may be a few million more overpayments to take off that total.
Publishers body the NMPA is chuffed. “We are extremely pleased that songwriters and music publishers finally will receive the over $400 million they are owed in mechanical and performance royalties from the 2021-2022 period,” said president and CEO David Israelite.
He also praised “the fact that the majority of this adjustment will be distributed by the MLC in a completely transparent and expedient way”.
There is some context to this comment, which is the fact that the US Register of Copyrights has begun its mandatory ‘review of the designation’ of the MLC, as well as the DLC entity that represents the music services in its dealings.
A recent Billboard interview with the new boss of DSPs body DiMA, Graham Davies, recently called attention to one of the issues that will come up during that review process: “neutrality is an area that needs particular attention”.
This is about links between the NMPA and the MLC – in that interview Billboard claimed that they share an outside counsel – and whether that is a concern for “the services as well as other songwriters” (in Davies’ words) around how the MLC operates. Israelite’s reference to the transparency of the windfall distribution surely has one eye on that debate.
So yes, even a story about a several-hundred-million-dollar windfall for the publishing side of the industry has a potential argument brewing in the background. That’s the music business for you!
