Sony Settlement Seen Reducing Contention in CRB 2018-2022 Mechanical Rate-Setting
A settlement between Sony Music Entertainment, the National Music Publishers Association and the Nashville Songwriters Association International in the Copyright Royalty Board's 2018-2022 statutory mechanical royalty rates further reduces the contentiousness of the rate-setting proceeding, said industry executives and lawyers in interviews Monday. The settlement, filed Friday, likely solidifies the mechanical rates for CDs, digital downloads and ringtones, they said. Other parts of the mechanical rate-setting remain open to change but are likely to be less volatile following the Sony settlement, the experts predicted.
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Sony agreed in the settlement to language similar to a previous agreement to maintain the existing mechanical rate for downloaded songs at 9.1 cents per downloaded copy for songs less than five minutes long and 1.75 cents-per-minute for songs more than five minutes long. The settlement also would maintain existing mechanical rate for ring tones at 24 cents per copy. NMPA, Universal Music Group and Warner Music Group reached a rate deal in June, while Apple made a proposal in July to simplify the rate-setting framework (see 1607180067).
Sony agreed to withdraw from parts of the rate-setting proceeding that deal with the royalty rates for on-demand and streaming services. The company's entrance into the streaming portion of the rate-setting proceeding angered both the music publisher and songwriter communities, a music industry executive said. NMPA and NSAI attempted to exclude Sony from the rate-setting proceedings, but the CRB denied the groups' motion.
The accord all but certainly means the existing mechanical rate for CDs, downloads and ringtones will now “roll over,” a tech sector lobbyist said. Sony had been the lone major holdout on those rates, which made the proceeding's outcome uncertain because Sony's presence opened the door to more recording artist influence in the rate-setting, the lobbyist said. The company was “the last major label left” seeking a change in the mechanical rates, said music industry lawyer Chris Castle. “That means everyone should be aligned, so they're no longer in a circular firing squad.”
Withdrawal from the on-demand and streaming portions of the rate-setting proceeding leave remaining parties in the proceeding with one fewer negotiating partner but it doesn't “change anything dramatically,” a tech sector lobbyist said. “It's just more political optics.” Sony had sought a result on on-demand and streaming royalties that caused consternation within the music publisher community, which accused Sony of attempting to curry favor with streaming services at songwriters' expense, the lobbyist said. The company participated in the rate-setting for on-demand and streaming royalties as part of a larger RIAA-led petition.