In mid December, the Copyright Royalty Board issued its final ruling approving the “Subpart B” (physical product and digital downloads) settlement between record labels and publishers for the Phonorecords IV rate-setting period (2023-2027).
This settlement increases the mechanical royalty rates for physical and digital downloads in the United States from the greater $0.091 or $0.0175 per minute or fraction thereof to the greater of $0.12 or $0.0231 per minute or fraction thereof.
This new rate is effective as of January 1, 2023, and will be adjusted annually effective each January 1 for the next five years to account for cost-of-living increases tied to the Consumer Price Index.
In late December, the Copyright Royalty Board issued its final ruling approving the “Subpart C” (streaming) settlement between digital music services (DSPs) and publishers for the Phonorecords IV rate-setting period (2023-2027).
This settlement increases the streaming royalty rates for several categories of streaming offerings, including paid subscription (e.g. Apple Music), ad-supported streaming (e.g. Spotify free tier), streaming bundles (e.g. Amazon Prime), portable (music be streamed to a phone), non-portable (limited to a desktop computer only), and locker (streaming of digital downloads you own that you uploaded to the cloud).
The new headline streaming rates are:
2023: 15.1% of DSP revenue
2024: 15.2% of DSP revenue
2025: 15.25% of DSP revenue
2026: 15.3% of DSP revenue
2027: 15.35% of DSP revenue
This headline rate increase is a small increase on top of the prior historic rate increase for the Phonorecords III period (2018-2022).
There were also improvements with the Total Cost of Content (TCC) prong of the streaming rate calculation, including raising the penny-rate floor of the per-subscriber minimum to $1.10 per subscriber for portable streaming subscriptions, and $0.60 per subscriber for non-portable streaming subscriptions. This TCC prong is also tied to a percentage (26.2% in most cases) of what the record labels are paid, effectively providing a minimum royalty floor for publishers.
This new rate is effective January 1, 2023.