The Copyright Royalty Board (CRB) finalized its Phonorecord III determination in August, leading to significant additional payouts for songwriters and publishers.
According to the Mechanical Licensing Collective (the MLC), this decision will cost nearly $400 million in extra compensation.
Underpayments and Overpayments:
During the Phono III blanket license period spanning 2021-2022, digital service providers (DSPs) such as Spotify, Amazon Music, YouTube, and Pandora underpaid rightsholders by $419.2 million.
This amount comprises $281 million in mechanical royalties and $137.8 million in performance royalties. These underpayments stem from final rates surpassing interim rates amid a lengthy royalty dispute between publishers and streaming platforms.
Conversely, DSPs overpaid publishers for mechanical royalties by $28.8 million during the Phono III historical unmatched period (2018-2020). Consequently, the net bonus owed to songwriters and publishers is approximately $390.3 million.
Deadline and Expected Adjustments:
DSPs were given until February 9 to review and amend their previous payments following the CRB’s final determination. However, some DSPs failed to submit the necessary adjustment reports by the deadline.
The MLC anticipates an additional $10 to $15 million increase in adjustments once these reports are accounted for.
It’s important to note that the reported amounts are estimates subject to change pending official calculations by the MLC.
Industry Response and Commentary:
NMPA president/CEO David Israelite expressed satisfaction with the outcome, highlighting the long-awaited compensation for music creators and copyright owners.
He emphasized the transparency and practicality of distribution facilitated by the Music Modernization Act (MMA), acknowledging the delay in payment while underscoring its critical importance.
Access to Detailed Information:
For those interested, a comprehensive breakdown of adjustments from individual DSPs is accessible on the MLC website.
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