Streaming services such as Spotify and Google Play Music are things that I use every single day, and when you think about it, they really have changed the way people purchase and listen to music. Opening an app on your phone and having access to millions upon millions of songs is way more convenient than stocking up on physical CDs, and while consumers have benefitted greatly from this transition, the same hasn't exactly been true for songwriters and music publishers.
Up until now, royalty rates for songs on streaming services have been set at just 10.5% to be split between both songwriters and the labels that publish their music. However, the National Music Publishers' Association recently announced that this rate is being increased to 15.1% for the next five years. This will see a total increase of 43.81% during that time, and although specifics of how this will be dolled out are still up in the air, that's a lot more money in the pockets of the people responsible for creating the songs we know and love.
Per NMPA President and CEO, David Israelite:
We are thrilled the [Copyright Royalty Board] raised rates for songwriters by 43.8 percent -- the biggest rate increase granted in CRB history. Crucially, the decision also allows songwriters to benefit from deals done by record labels in the free market. The ratio of what labels are paid by the services versus what publishers are paid has significantly improved, resulting in the most favorable balance in the history of the industry.
Breaking down these numbers a bit more, the NMPA states the increased rate will see a split of $3.82 to $1 for labels to publishers. This means publishers will get a new rate of 26.2%, which is a nice bump up compared to the 21% they were previously receiving.
Talking about this, Israelite added:
While an effective ratio of 3.82 to 1 is still not a fair split that we might achieve in a free market, it is the best songwriters have ever had under the compulsory license.
For a casual listener like myself, I honestly never realized how little songwriters and publishers were paid as a result of their work being put on streaming services. It's simply something that doesn't cross my mind in the day-to-day, but now that I'm aware of what was taking place, I'm thrilled to see that steps are being taken to go in the right direction.
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