NMPA and NSAI ask CRB judges to set interim rates

By Emmanuel Legrand

 

The National Music Publishers’ Association (NMPA) and Nashville Songwriters Association International (NSAI) have submitted a joint motion to the Copyright Royalty Judges from the Copyright Royalty Board (CRB) to urge them to "set interim rates and terms that explicitly maintain the current rates and terms" that would remain in effect until the judges publish a new final rate determination. 

 

  The NMPA and NSAI took the initiative as the CRB has to provide final rate determination following a recent ruling by an appeals court asking the judges to address specific issues relating to the Phonorecords III rate proceeding that called for a 44% increase in mechanical rates to be applied for the the 2018-2022 term, up from 10.5% to 15.1% of services' revenue. The CRB decision had been appealed by streaming services such as Amazon, Spotify and Pandora. The appeals court sent the parties back to the CRB for a new determination proceeding, while pointing out a couple of technicalities that needed to be addressed.

 

  "As the Remand Determination will be retroactive across the rate period, whatever rates are in effect pending that determination will necessarily be interim rates. The question then is not whether there will be interim rates, but whether the interim rates will be reasonable interim rates that are consistent with the Decision and the evidence supporting the original determination by the Board," reads the motion, adding that "the Judges have the authority to set the Interim Rates."

 

Harming copyright owners

 

  The NMPA and NSAI claim in the filing that these Interim Rates "are needed to avoid significant confusion and disruption in the mechanical licensing market, and harm to copyright owners during the period pending the Remand Determination." They ask the judges to "grant this motion and explicitly provide for the maintenance of the current rates and terms pending the Remand Determination."

 

  In a statement, NMPA President & CEO David Israelite elaborated on the reason for filing the motion. "We understand Spotify and Amazon are considering cutting what little they pay songwriters during the CRB remand process," said Israelite. "In 2018, the CRB gave songwriters a hard-fought rate increase, and Spotify and Amazon appealed that decision based on technicalities. It appears that, rather than await the results of that appeal at the CRB — which we believe will uphold the songwriters' raise — these multi-trillion dollar companies are doubling down on their assault against creators by lowering what they pay before we have a final determination. Exploiting this interim period to reduce payments is a pure money grab when songwriters are at their most vulnerable due to the COVID-19 crisis."

 

  Israelite explained that the remand "was never intended to be a window for services to slash what they pay songwriters, and it is unconscionable for any service to do so while the rate determination is still in flux, particularly as the CRB's assertion that higher rates are needed was substantively upheld by the D.C. Circuit."

 

Controversial positions

 

  He concluded: "The motion we filed affirms leaving the existing rate structure in place during this remand process. This should be obvious, but it appears Spotify and Amazon may stop at nothing to undercut the very creators they rely on. Apple and Google notably are not taking the same controversial position and instead see songwriters as business partners as opposed to adversaries."

  Garrett Levin, CEO of the Digital Media Association (DiMA), which represents the main digital services, offered a different take on the remand. For DiMA, it is not only the rate setting process that had been tossed by the appeals court, but also the rates as defined by the process. Therefore, setting interim rates based on those determined by the CRB would go against the ruling of the appeals court.

  “There is a legal process in place to determine the applicable rates at issue, and the Court of Appeals ultimately agreed that the original decision of the CRB was unsustainable,” said Levin. “The findings from the court are clear – the Phonorecords III rates in question are vacated in their entirety, leaving the Phonorecords II rates and structure as the only enforceable standards for the industry."

  He added: "Our individual members will make their own business decisions in light of that reality, but rest assured, at the end of this process copyright owners and songwriters will receive the full amount of mechanical royalty payments they are owed as ultimately decided by the CRB."