CRB Comment Period for Mechanical Rate Settlement Draws Supporters, Detractors — and Stevie Wonder?

During the Copyright Royalty Board’s (CRB) comment period over the negotiated settlement establishing the U.S. mechanical rate for songs in the 2028-2032 five-year term — including applying a cost-of-living adjustment (COLA) each year to the current rate level — a formidable group of companies and some well-known music trade organizations (which include those who negotiated the settlement) came forward in support.

However, comments to the CRB judges from a number of organizations whose websites or public statements claim they represent a large number of songwriters and publishers, as well as the usual group of respected U.S. music industry contrarians, are equally vocal in saying they do not support the settlement. Many of them urge the CRB judges to establish a higher rate than what the settlement is proposing.

In fact, a key question has emerged in the comments from those who oppose the settlement: At what rate level does the settlement begin for the next five-year term? Many of those opposing the settlement claim that its wording appears to lower the mechanical rate back to its initial starting point of 12 cents for the five-year term beginning in 2028, as opposed to starting with a COLA rate, which this year stands at 13.1 cents, with two more years of potential adjustments still to come.

In the prior five-year term covering 2023-2027, the mechanical rate began at 12 cents and implemented COLA adjustments after the CRB judges rejected a settlement by the major record labels and music publishing and songwriter organizations to keep the rate for the 2023-2027 five-year term at 9.1 cents — a number that had already been static for 16 years.

(The mechanical rate in question will cover what rate payment will go to songwriters when sales of CDs, vinyl, cassette and downloads occur in the U.S. This is known as the Subpart B rate, which also includes ringtones. It is part of the overall rate determination process that will also establish rates for streaming for the upcoming five-year term in a procedure known as Phonorecord V.)

However, some sources in the camp that negotiated the settlement say it’s an incorrect interpretation of the wording of the settlement, and that the rate would not be set back to 12 cents. According to one of those sources, as things stand now, the proposed settlement rate would start at the 13.1 cent level per song.

Even if the interpretation that the wording lowers the rate back to 12 cents is incorrect, the fact that so many have commented on it likely gets the issue of what the starting rate should be in front of the CRB judges — who, after becoming aware of the problem, can state an actual starting rate in whatever determination they make.

Meanwhile, some of those opposing the settlement suggested specific higher mechanical rates for the new term. Those suggestions ranged from a 15.6 cent rate, or three cents per minute for songs longer than five minutes, to 22 cents, or 6.6 cents per minute for songs over five minutes.

The Subpart B settlement for mechanical rates for music sale products like CDs, vinyl, cassettes and downloads is supported by all of the groups who participated in the settlement, which are: the National Music Publishers Association (NMPA); the three majors (Sony Music Entertainment, Warner Music Group and Universal Music Group); the Nashville Songwriters Association International (NSAI); Music Artists Coalition (MAC); and the American Association of Independent Music (A2IM), an indie record label trade group. Other groups coming out in support of the settlement, according to the comments on the CRB website, are the American Independent Music Publishers (AIMP); the Recording Academy; Church Music Publishers Association; Songwriters of North America (SONA); the Production Music Association; Associated Production Music; and the Music Publishers Association of the United States, which has a website saying the organization was founded in 1895 and appears to include members from such well-known independent music publishers as peermusic, Boosey & Kawkes, Alfred Music, Hal Leonard and Wise Music Group.

Those opposing the settlement are the Songwriters Association of Canada, which counts as its members such songwriters as Arun Chaturney, Eddie Schwartz, Greg Johnston and Andrea England, among others; Fair Trade Music International, whose comment says it represents 500,000 music creators around the world; Songwriters Guild of America; Word Collections; Eight Miles Music Companies; Abby North (North Music Group); Monica Corton (Go To Eleven Entertainment); and the Society of Composers & Lyricists, whose advisory board members include such iconic songwriters as Bill Conti, Charles Fox, James Newton Howard, Alan Menken, Diane Warren and Hans Zimmer. Songwriters and artists who supplied comments opposing the settlement also included Blake Morgan, David Lowery, Helene Lindvall, Michelle Shocked and George Johnson.

Another objection to the settlement made by those opposing it was the observation that both the earlier period rate and the proposed settlement rate for the upcoming five-year term do not set a floor rate. Those parties worry that a deflationary period would lower the rate and argue that a floor rate should be imposed going forward so that the rate would stay at whatever had been set by upward COLA adjustments. The interpretation that there is not a floor rate was confirmed by a source within the camp who participated in and supports the settlement.

Even one organization that supports the settlement — the Songwriters of North America (SONA) — suggested that a floor rate be added to the settlement, or, as its comment put it: “One clarification that would further strengthen the proposed settlement while remaining fully consistent with its overall framework. Specifically, SONA encourages the Copyright Royalty Judges to clarify that annual CPI-U adjustments should operate as upward-only cost-of-living adjustments. The result is that statutory royalty rates may increase or remain unchanged from year to year, but should not decrease below the rate that was in effect during the immediately preceding year.”

The Subpart B rate determination also includes setting the mechanical rate for ringtones, which have stood at 24 cents since that rate was first set in 2008 and which would stay at that level under the proposed settlement. However, those opposing the settlement said the rate should be higher, suggesting a rate in the range of 38 cents to 40 cents, according to Billboard’s reading of the comment.

Finally, some sources wonder if the last comment, which came in under the wire with a posting on the CRB comment section a few seconds before 11:52 p.m. on Monday (Aug. 10), is really from Stevie Wonder, because unlike the vast majority of comments, it didn’t list any contact information. Moreover, that comment didn’t make a specific stance in support of the settlement, nor did it include any specific details about the CRB rate determination process. Instead, it made a broad observation on the economics of songwriters.

The comment reads, “I, Stevland Morris, aka Stevie Wonder, believe songwriters should have the opportunity to earn as much as possible from every form in which their work creates value, including physical products. While I know the greatest fight ahead will be for fair compensation from streaming, my commitment is broader; songwriters deserve to be paid fairly wherever and however their songs generate revenue. We are living in a time when the extraordinary gift of songwriting has too often been undervalued and writers’ earnings have failed to reflect the true and lasting worth of what they create. I will always advocate for songwriters to be fully and fairly compensated because songs do not simply belong to a moment. They can live far beyond a lifetime touching generation after generation. And as the value and reach of those songs continue to grow so should the compensation of the writers who gave them life. Let the gift that has given so much to the world always received its fair share in return.”