While payouts averaging $0.005 to $0.007 to artists from streaming seems pretty minimal, it’s even worse for songwriters, who generally only see about a tenth of that revenue. That’s why the recent ruling by the Copyright Royalty Board’s (CRB) that awards songwriters a 44% increase is so important. While still just a fraction of what copyright holders make, it’s still a big step in the right direction.
While prescribing a higher rate, the CRB also simplified the manner in which songwriters are paid mechanical royalties. Previously it might take a dozen calculations to determine what was owed to a songwriter or publisher, and thankfully that’s been decreased to just two.
Still, even though the ruling is much higher than ever before, it’s not a total victory for songwriters either. Songwriters asked to be paid directly on streams, but instead are paid on a percentage of the gross revenue. This means that the overall percentage of revenue paid to songwriters is going from 10.5% to 15.1%, but gradually over the next five years.
While paying out a larger portion of the income to songwriters won’t hurt the deep pocketed players like Amazon, Apple and Google, it will hurt smaller distributors like Tidal, Deezer, and even Spotify. Despite Spotify being the market leader with over 70 million paid subscribers, it’s still losing money, and actually lost over $500 last year alone. That said, paying out a larger mechanical royalty that gradually increases probably isn’t the most daunting thing facing the streaming network, which faces multiple lawsuits from publishers and a new listing on the New York Stock Exchange.
If you’re a songwriter, your royalties are about to go from pretty dismal to a little less dismal, but at least it’s a step in the right direction, and the amount is substantial enough to actually make a difference to many.