US publishers and streaming services reach agreement on new royalty rates

Under the new deal, the headline royalty rate for songs in the US will be set at 15.35 percent, phased in over five years from 2023 to 2027.

Liam Konemann
  • By Liam Konemann
  • 1 Sep 2022
  • min read

The National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International (NSAI), and the Digital Media Association (DiMA) have announced a settlement for certain mechanical streaming rates in the US. Covering the years 2023-2027, the agreement will provide higher royalty rates for songwriters and music publishers. It will also promote sustainability, innovation, and continued investment for the US music industry, and heralds a new level of collaboration between different areas.

Under the new agreement, the headline royalty will be set 15.35 percent, which will be phased in over five years. The deal also includes increases to per-subscriber minimums and the Total Content Costs (TCC) calculations, which reflect the rates that services pay to record labels. Taking into account the continued innovation of streaming services, the agreement also updates the treatment of product or service bundles that include music streaming, among other changes. 

The new headline rate comes as the Mechanical Licensing Collective is fully operational, delivering commission-free royalty payments as a result of the passage and implementation of the Music Modernization Act (MMA). The updated agreement is supported by DiMA member companies, Amazon, Apple, Google, Pandora, and Spotify, as well as NSAI’s Board of Directors, and the NMPA Board which is comprised of leading independent and major music publishers.

DiMA President and CEO Garrett Levin says, ‘This agreement represents the commitment of the streaming services to bringing the best music experiences to fans and growing the streaming ecosystem to the benefit of all stakeholders, including the creative foundation of songwriting. For streaming services, this moment presents an opportunity to pursue new collaborations with publishers and songwriters in the context of economic certainty that will support continued innovation. Perhaps more than anything, this agreement demonstrates the potential for industry progress when parties come to the table for good faith discussions’

NMPA President & CEO David Israelite says, ‘This historic settlement is the result of songwriters making their voices heard. Instead of going to trial and continuing years of conflict, we instead move forward in collaboration with the highest rates ever, guaranteed. We thank the digital services for coming to the table and treating creators as business partners. Critically, since this is a percentage rate, we know that as streaming continues to grow exponentially, we will see unprecedented value of songs.’

NSAI Executive Director Bart Herbison says, ‘This collaborative process will lead to increased songwriter compensation from digital streaming companies and locks in our historic 43.8% increase from the previous CRB proceeding. Along with the upward rate momentum there are also new structures to help ensure minimum payments.’