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Copyright Royalty Board Asked to Approve 32% Increase on Mechanical Royalties for Physical Products, Downloads - Variety

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As often goes in Washington, sometimes the best solution is to meet in the middle. That appears to be the takeaway from today’s motion to the Copyright Royalty Board (CRB) to increase mechanical royalties by 32% immediately — or from 9.1 cents to 12 cents per track — as related to physical product, downloads, ringtones and music bundles.
Signatories on the motion include representatives from the major label members of the Recording Industry Association of America (RIAA), as well as members of the National Music Publishers Association (NMPA) and the Nashville Songwriters Association International (NSAI). The CRB still needs to approve the proposed new rate.
The rate had been disputed leading to a legal deadlock that threatened the ratification of the rate in the 2023-2027 period. Rightsholders and trade groups were aiming for 15 cents.

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The motion states that the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI) along with  Sony Music Entertainment, Universal Music Group and Warner Music Group, as well as qualified copyright owners, have come to an agreement as related to the rate change, which would take effect in 2023.
Earlier this year, Sony Music Publishing chairman Jon Platt called the rate-setting process “currently the most critical issue facing songwrtiters and music publishers in the United States.”
The rate approval would mark a big win for songwriters and publishers who have long argued that essential creators are not compensated fairly for their contributions to a song or recorded work. In fact, the rate of 9.1 cents was set in 2008 at the beginning of what is called the Phono IV process, involves royalties for both physical (CD, vinyl and cassettes) and digital (streaming and downloads) formats.
Physical vinyl has grown into a billion-dollar business, per the RIAA’s 2021 year-end report. While it pales in comparison to the $12 billion in revenues that music streaming services brought in last year, it remains a dominant format with no sign of a slow-down.
In a statement, SONA executive director Michelle Lewis said: “SONA enthusiastically supports the proposed phonorecords IV Subpart B settlement, which controls how much songwriters and publishers are paid for Digital Permanent Downloads, Vinyl & CD sales. Big or small, all songwriters should always have a voice in the decisions that govern and affect our livelihood. We are grateful that our collective voice has been heard. This is a long overdue step in correcting the low rates historically paid to songwriters and it’s about time a song’s inherent value is properly recognized.”
“After wide consultation with songwriters, publishers, and labels, we are glad to have reached a solution we believe addresses the core concerns of the CRB judges and the individuals and organizations who shared their views during this proceeding,” added RIAA CEO Mitch Glazer. “As a music community, we are strongest when we come together to forge lasting and sustainable win-win deals.”

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See below for additional statements related to the CRB motion:
“This new settlement gives songwriters a 32% raise on sales of vinyl, CDs and downloads — raising the rate from 9.1 cents to 12 cents — and critically also includes a yearly cost of living adjustment to address inflation. This extremely positive result is due in large part to the creators who made their voices heard in the CRB process. With this settlement filed, we clear the way to focus solely and tirelessly on raising streaming rates. As we battle the biggest companies in the world, who are pushing for the lowest royalty rates in history, songwriters and their advocates stand more united than ever.” — David Israelite, NMPA president and CEO
“We want to thank the CRB for signaling an opportunity for an increase on physical rates. The 32% increase on CDs, Vinyl and downloads is welcome and the fact that the cost of living adjustment is built in helps us maintain increases in the future.” — Bart Herbison, executive director, NSAI
“The AIMP fully endorses the proposed CRB Subpart B settlement, which would increase the mechanical rate for physical sales and digital downloads from 9.1 cents to 12 cents. This is a step in the right direction and will be a significant boon for the independent music publishing community. Moving forward, nearly all independent publishers will tell you that the future of the music business is in streaming, and we applaud the continued efforts of the NMPA to fight for better streaming rates for all independent music publishers and songwriters.” — Association of Independent Music Publishers
“I want to applaud the NMPA and RIAA for working together to act in the best interest of songwriters. This settlement demonstrates that when the music community acts collaboratively, we can achieve meaningful progress for music creators.”  — Harvey Mason jr., CEO of the Recording Academy.
“This settlement provides a necessary and long overdue raise for songwriters that will make a real difference in their lives and livelihoods. Importantly, it will also ensure that songwriters continue to be paid fairly over the next five years as this increase is indexed for inflation.” — Evan Bogart, chair of the Recording Academy’s Songwriters & Composers Wing
“The Ivors Academy of UK songwriters and composers welcomes the news that the value of songwriting and publishing rights are beginning to be better recognised. This is an important settlement and indicates the necessary direction of travel.” — Graham Davies, chief executive, Ivors Academy
“This unprecedented rate increase for vinyl, CDs and downloads will have a significant impact on our industry and hopefully points to potentially higher rates for streaming from the CRB. We appreciate the efforts to come to this agreement and thank NMPA for working on behalf of songwriters and publishers.” — Brittain Ashford, executive director, Music Publishers Association of the United States
“BMAC supports the proposed phonorecords IV Subpart B settlement. Our organization applauds the negotiators for proposing to increase payment for artists by 32%, and we are particularly happy to see the acknowledgments of cost of living adjustments for songwriters. As we recognize there’s still much more to be done, we must acknowledge each step made in the right direction towards equality for the songwriter.”  — Prophet, cofounder/cochair Black Music Action Coalition
“This new settlement is a massive step forward for all composers and songwriters and will be of great benefit to many thousands of production music creators whose also works are offered for sale to the public through CDs, vinyl and digital platforms. We thank the NMPA for negotiating a 32% raise and continuing to fight for higher, fairer streaming rates in the CRB this fall.” — Adam Taylor, chairman, Production Music Association (PMA)
“With the sale of vinyl and CDs continuing to rise, songwriters getting a royalty increase shows that labels are beginning to see that we deserve better rates. We hope that with the impending CRB trial, all parties will try to work together so that songwriters can get closer to having a livable wage.” – Tiffany Red, founder and executive director, The 100 Percenters
“We are very pleased with the 32% increase included in the Subpart B settlement negotiated by the NMPA. Songwriters are in great need of better rates that more fully reflect their contributions. We hope that the CRB will recognize this in the larger streaming fight happening this year and that this bodes well for things to come.” — Don Cason, president/CEO, Church Music Publishers Association
“This settlement is a meaningful win for songwriters who will see a 33% jump in royalties for physical music sales and downloads starting in 2023 while locking in future increases to keep up with inflation for the life of the deal. We are so grateful to the many grassroots songwriter advocates who refused to accept a status quo settlement and kept banging on the door of the CRB until they were heard.” — Artist Rights Alliance

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“Music Artists Coalition applauds and endorses the proposed CRB settlement which gives songwriters a much-deserved raise on physical sales and downloads. The songwriting community has successfully advocated for this rate adjustment and will continue fight for an increase where it really matters - streaming.  Finally some good news for music creators!” — Susan Genco, Music Artists Coalition board member
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