It was reported last week that Spotify, along with Google, Amazon and Pandora, had filed a notice of appeal for the ruling that formally issued the final rates and terms for songwriter mechanical royalties, determining the amount labels and digital services are to pay music publishers.
Since this announcement, the streaming service has faced backlash from the songwriting community. Well-known songwriters like Natalie Hemby, Lee Thomas Miller and Luke Laird have since shared their feelings about the appeal on social media.
Spotify responded to the backlash today in a blog post titled: You Might Have Heard about the Streaming Industry’s CRB Appeal—Here’s What You Need to Know. The blog post opens with:
“In the U.S., the royalty rates for publishing rights for digital music services are determined by a panel of judges, the Copyright Royalty Board (CRB). The rates also create a reference point for services that don’t rely on these government-set rates, and they indirectly influence the ways that publishing license rates work around the world. The CRB recently came to a conclusion about how these rights and rates would work for the next few years. And we appealed the outcome.”
Further, the post rejects that Spotify is ‘suing’ songwriters, and that songwriters do deserve to be paid more, but that the industry needs to “to continue evolving to ensure that the people who create the music we all love…can earn a living.” While Spotify does claim to support the U.S. effective rates rising to 15 percent between now and 2022, they write that “the CRB’s 15% rate doesn’t account for all these rights,” like for music videos and lyrics. To address the streaming service’s reasoning behind their appeal, they write:
“The CRB rate structure is complex and there were significant flaws in how it was set. A key area of focus in our appeal will be the fact that the CRB’s decision makes it very difficult for music services to offer “bundles” of music and non-music offerings. This will hurt consumers who will lose access to them. These bundles are key to attracting first-time music subscribers so we can keep growing the revenue pie for everyone.
Music services, artists, songwriters and all other rightsholders share the same revenue stream, and it’s natural for everyone to want a bigger piece of that pie. But that cannot come at the expense of continuing to grow the industry via streaming. The CRB judges set the new publishing rates by assuming that record labels would react by reducing their licensing rates, but their assumption is incorrect. However, we are willing to support an increase in songwriter royalties provided the license encompasses the right scope of publishing rights.”
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