September 25, 2021

Music license fees paid by streaming services like Spotify or Apple Music to increase

The Copyright Royalty Board of the U.S. Library of Congress—which determines the license fees paid by streaming services to artists (and their publishers)—has reportedly increased the royalty rate from 10.5% to 15.1% of total revenues for the five-year period from 2018 to 2022. Streaming services rely on the compulsory license established under U.S. law rather than negotiate directly with publishers. For comparison, Netflix and Amazon must negotiate with studios for the use of programs, which is why their catalogs are not “all-inclusive” in the way that music streaming services are.

As a result of the change, the rates paid by Spotify, Apple, Pandora, Amazon, Google, and others will increase. An additional late fee for insufficiently timely payments has also been added, though the exact terms of this have not yet been disclosed. Due to this change, it can be inferred that this may have a knock-on effect resulting in the subscription fees for these services to increase. David Israelite, President and CEO of the National Music Publishers’ Association, characterized the change as both “the most favorable balance in the history of the industry” and “not a fair split.”