Streaming services to pay more for music after US crackdown

APPLE, Spotify, Amazon and Google have been dealt a major blow that could have a big impact on what you pay for your music streaming service.

US COPYRIGHT authorities have decided to increase the royalty payments music streaming companies like Spotify and Apple Inc must make to songwriters and music publishers over the next five years .

The Copyright Royalty Board of the US Library of Congress issued a written decision that altered the formulas used to determine how much of their revenue streaming companies must share with songwriters and the music publishing companies they typically hire to collect licensing fees on their behalf.

The National Music Publishers Association said the ruling, which has not yet been made public, will require streaming companies to give 15.1 per cent of their revenue to songwriters and music publishers. The previous rate was 10.5 per cent.

The board, which consists of three judges, held a trial last year in which the trade group squared off against Spotify, Apple, Alphabet Inc, Pandora Media Inc and Amazon.com Inc, which had opposed NMPA’s proposed rate increase.

“This is the best mechanical rate scenario for songwriters in US history which is critically important as interactive streaming continues to dominate the market,” said NMPA chief executive David Isrealite in a statement.

A Pandora spokeswoman — whose company has recently stopped operating in Australia — declined to comment.

Representatives of Apple, Alphabet, Spotify and Amazon did not immediately return requests for comment either.

Streaming services must pay a fee, known as a “mechanical license,” every time a user listens to a song.

These licensing fees are typically paid to music publishing companies like Sony/ATV Music Publishing, which collect the fees on behalf of recording artists in exchange for a commission.

US law requires the Copyright Royalty Board to set the rates for these mechanical licenses, rather than letting publishers negotiate rates with streaming services.

Daniel Ek, CEO of Swedish music streaming service Spotify. Picture: Toru Yamanaka