Mechanical royalties will increase by 32% for songwriters in the United States

Image Credit: Music Business Worldwide

Recently, a negotiation has been underway in the United States over particular types of mechanical royalty rates paid to songwriters for physical music sales and downloads, Music Business Worldwide reports.

On May 5, groups representing songwriters, music publishers and record labels reached an agreement to settle the negotiation. The mechanical royalty rate that publishers/songwriters receive for music purchased on physical discs or downloads has been 9.1 cents per track since 2006. Now the settlement proposes a 32% increase to 12 cents per track . Additionally, songwriter royalties will automatically increase each year – relative to the rate of inflation.


Who pays the mechanical royalties?

Record labels pay mechanical royalties to publishers and songwriters in the United States. Consequently, if the CRB decides to increase the mechanical rate from 9 cents to 12 cents for physical formats, it is the record companies who will have to pay this to the songwriters. This led to a slight legal problem as the same parent companies that own the three biggest music publishers also own the three biggest record labels.

Now the Copyright Royalty Board must review the agreement. The CRB refused to approve an earlier deal covering physical sales and downloads due to concerns over “static” pricing.

The new movement states: “The new regulations provide ‘a reasonable basis’ for statutory royalty rates and conditions for Subpart B configurations.

“First, it provides an immediate increase of 32% to 12¢ per track for physical phonetic recordings and permanent downloads and provides annual adjustments based on inflation for subsequent years of the term.

“This substantial increase and provision for annual adjustments addresses judges’ concerns about ‘static’ rates.

“Second, it represents the consensus of stakeholders representing the vast majority of the ‘mechanical’ rights market for Subpart B configurations, including many songwriter groups and representatives who did not support the previously proposed regulations.”

“AS A MUSIC COMMUNITY, WE ARE STRONGER WHEN WE MEET TOGETHER TO FORGE SUSTAINABLE AND SUSTAINABLE WINNING BUSINESSES.”

Mitch Glazier, IRAA

Related: What royalties do music platforms collect?


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