Increased Royalty Rates: Even More Money Not Making It To Songwriters

The American Mechanical Licensing Collective (AMLC) was disappointed to learn that Spotify, Pandora, Amazon and Google have asked the United States Court of Appeals for the D.C. Circuit to reverse, or possibly adjust downward, the increased mechanical royalty rates recently ruled on by the U.S. Copyright Board (CRB). Many AMLC board members have spent the last decade directly working with their peers in the industry to secure more equitable royalties from the music services for the streaming of music. The AMLC agrees with the standing ruling of the CRB.

 It’s important to note that unlike every other creative sector (i.e. film, TV, book author, record label, visual artist), the U.S. government regulates how much money is required to be paid to the songwriter and music publisher. This effectively negates the ability for a songwriter to negotiate a “free market” royalty rate commensurate with what they believe reflects the value of their work. It is particularly important to note this today, as more money is being generated by the use of music than at any previous point in history. However, despite this increased revenue, music creators are earning less and, in many cases, due to existing market inefficiencies, are not even receiving the amounts they earned. As the valuations of companies using music climb to historic heights, the AMLC is adamant in its belief that royalty rates should also increase and, as important, the music creator must receive all of what they earn.  These simple goals are crucial to the long-term health of the entire music industry ecosystem.

Therefore, as we work collectively as an industry to ensure the rates go up, we must also work collectively as an industry to ensure the money that was generated from the use of music ends up in the pockets of those who earned it. 

This simple point ties directly into the Mechanical Licensing Collective (MLC) mandated by the Music Modernization Act. The MLC will collect royalties from the digital music services and be responsible for paying this money to the songwriters and music publishers whose work earned it. However, the MMA dictates that if, after a relatively short period of time the rightful recipient of the money is not found, the MLC (based on board recommendations and other oversight) can distribute these so called “blackbox” royalties by  market share disbursements. As a result, it is entirely possible that, despite an increase in streaming rates, music creators will still not get paid their money or, even worse, lose it to those who did not earn it.

 The AMLC exists, and is applying to be certified as the MLC, in large part to address this potential catastrophe. We firmly believe that all appropriate steps must be taken to make certain that so-called “blackbox” royalties end up in the right hands. In addition, the board members of the MLC should not endorse or recommend that significant portions of other people’s royalties be paid to their companies (or those with whom they have business relationships) based on their market share. The AMLC has been, and will continue to be, resolute in avoiding such obvious conflicts.

 Therefore, we ask that this conflict of interest also be recognized and simultaneously addressed as we work to correct and update the U.S. music market. After all, it does not matter to the songwriters what the royalty rates are, if the songwriters do not get paid what they have earned.

The AMLC believes it is vitally important that rates for songwriters and music publishers increase AND that the music creators whose work generated the royalties actually receive them. These are the AMLC’s objectives and its pledge to the entire global music community.