Songwriters' organisations object to the settlement between US publishers and labels freezing mechanical rates for physical products

By Emmanuel Legrand

Songwriters' organisations from the US and other continents have joined forces to oppose a recent deal struck by the the National Music Publishers’ Association (NMPA), and the Nashville Songwriters Association International (NSAI) with the three major companies – Sony Music Entertainment, Universal Music Group and Warner Music Group – agreeing to continue to freeze the mechanical royalties for physical products (mainly CDs and vinyl) to their 2006 level for the next four years.

  The agreement was disclosed recently in a “notice of settlement in principle” filed with the Copyright Royalty Board (CRB), which is charged with setting the rates for mechanical royalties. 

  The filing is about the "Determination of Royalty Rates and Terms for Making and Distributing Phonorecords," known as Phonorecords IV, covering the period 2023–2027, under Section 115 of the Copyright Act. The rates would cover mechanical royalties for physical phonorecords, permanent downloads, ringtones and music bundles.

Deep concerns from songwriters

  The motion filed by the NMPA, NSAI and the record labels concludes with the following recommendation to the CRB: "[The] Parties are pleased to have reached the Settlement, and respectfully request that the Judges publish the Settlement for comment, and promptly adopt the Settlement in its entirety as the Subpart B Configuration Rates and Terms and Late Fees."

  Tennessee- and Toronto-based Music Creators North America (MCNA), which regroups independent songwriter and composer organisations, has penned a letter to the CRB’s current three judges – Chief Judge Feder, Judge Strickler, and Judge Ruwe – expressing their “deep concerns” about the settlement agreement between the major labels, the NMPA and NSAI.  

  “Several highly conflicted parties to this proceeding have apparently agreed to propose a rolling forward to the year 2027 of the current US statutory mechanical royalty rate for the use of musical compositions in the manufacture and sale of physical phonorecords,” reads the letter jointly signed by MCNA officer and co-chair Ashley Irwin and the Songwriters Guild of America’s president Rick Carnes.

Publish the settlement for comment

  The signatories are asking for the CRB to authorise public comments on the procedure “especially by members of the broad community of music creators for whom it is financially unfeasible to participate in these proceedings as interested parties.” In the meantine, the settlement “should neither be acted upon nor accepted by the CRB."

  The CRB responded to the letter by stating: “After the parties to the partial settlement file a motion to adopt [the] settlement, the judges will publish the settlement in the Federal Register for comments by the participants in the proceeding and others who would be bound by the terms of the settlement."

  Irwin and Carnes argue that there has not been an increase of the statutory rate for physical products, which has been at 9.1 cents per composition and copy since January 1st, 2006. They claim that these frozen rates echoes the period between 1909 and 1978 during which rates were frozen. They noted that by 2027, those 9.1 cents "may be worth less than half of what it was in 2006.”

Deal fraught with conflicts of interest

  "[The] recording industry now seeks to repeat that history by freezing the 9.1 cent rate for an era that will have exceeded twenty years by the end of the Phonorecords IV statutory rate setting period," reads the letter, asking: “How can the US music publishing industry’s trade association, and a single music creator organisation (which represents at most only a tiny sliver of the music creator community) have agreed to such a proposal?"

  They added: “The three major record companies who negotiated the deal on one side of the table have the same corporate parents as the most powerful members of the music publishing community ostensibly sitting on the other side of the table. How on earth can these parties be relied upon to present a carefully reasoned, arms-length ‘Settlement in Principle’ proposal to the CRB under such circumstances, fraught as they are with conflicts of interest, without at least an opportunity for public comment?”

  Carnes and Irwin conclude: “We wish to make it emphatically clear that regardless of how the music publishing industry and its affiliated trade associations may present themselves, they do not speak for the interests of music creators, and regularly adopt positions that are in conflict with the welfare of songwriters and composers. Their voice is not synonymous with ours.”

Dissatisfaction with the idea of a frozen mechanical

  Music activist David Lowery has been one of the first voices to object to the settlement, in particular considering that vinyl sales have been booming in the US but the share that went to songwriters and publishers through mechanicals royalties has not progressed in the same way, as the rates have not even been adjusted to inflation since 2006. 

  On May 25, Lowery wrote on his blog The Trichordist: "Today the NMPA filed their motion to ask the CRB to adopt the frozen mechanicals. Which raises the question of if a willing buyer and a willing seller are the same person, does that equal a free market? Filing the motion isn’t the end of the story or even the end of the beginning because they failed miserably to take into account the dissatisfaction with the whole idea of a frozen mechanical."

  Organisations against the freezing of mechanical rates include the Society of Composers and Lyricists, Songwriters Association of Canada, Screen Composers Guild of Canada, Music Creators North America, Alliance of Latin American Composers & Authors, Asia-Pacific Music Creators Alliance, European Composers and Songwriters Alliance,Pan African Composers and Songwriters Alliance, among others. 

An opportunity to comment publicly

  For Kevin Casini, entertainment law professor at Quinnipiac Univ. School of Law, a "period and opportunity for the general public to comment publicly and on the record in these and other proceedings before the presentation to the CRB of this proposed settlement is in the interest of all involved."

  In a blogpost titled 'An Open Letter to My Senators, and the Copyright Royalty Board', he added: "Even if it is true that the mechanical revenue is a lost and dying stream, by the RIAA’s own figures, there stand to be billions of dollars at stake. An opportunity to be heard, without having to sign with a publisher and then hope that publisher takes up the fight you want, maybe that’s all the independent writers of the industry — and, indeed, the world — need to be able to win."