Copyright Board Begins Mechanical Royalty Rate Hearings

By • February 5, 2008

On January 28, the Copyright Royalty Board (CRB) began hearings that will determine mechanical rates for composers, songwriters and music publishers. In addition to setting rates for physical products, rates will be set for digital downloads, subscription services and ringtones.

The National Music Publishers’ Association (NMPA) says they will be representing the interests of writers and publishers and will be fighting vigorously to protect those interests to ensure that musical compositions are compensated fairly.

In opposition to the NMPA, the Recording Industry Association of America (RIAA) and the Digital Music Association (DiMA) have proposed significant reductions in mechanical royalty rates that would be disastrous for songwriters and music publishers.

NMPA President & CEO David Israelite stated, “The current rate for physical phonorecords is 9.1 cents. The RIAA has proposed slashing the rate to approximately 6 cents a song – a cut of more than one-third the current rate! For permanent digital downloads, NMPA is proposing a rate of 15 cents per track because the costs involved are much less than for physical products. The RIAA has proposed the outrageous rate of approximately 5 to 5.5 cents per track, and DiMA is proposing even less. For interactive streaming services, which some analysts believe will be the future of the music industry, NMPA is proposing a rate of the greater of 12.5% of revenue, 27.5% of content costs, or a micro-penny calculation based on usage. The RIAA actually proposed that songwriters and music publishers should get the equivalent of .58% of revenue. And DiMA is taking the position that songwriters’ and music publishers’ mechanical rights should be zero, because DiMA does not believe we have any such rights!”

Rick Carnes, President of the Songwriters Guild of America (SGA) and the first witness called in the CRB mechanical royalty rate hearings, stated, “Our opponents have to recognize that this rate setting is not a matter of gamesmanship for songwriters, but rather one of survival. As I stated in my testimony, in response to a question from those seeking to cut the mechanical royalty rate in half and to denigrate the importance and contribution of professional songwriters to the music industry, ‘Yes, songs are plentiful, just as rocks are plentiful. But if you want diamonds, you are going to have to pay the miners a living wage.’”

Charles J. Sanders, Counsel to SGA, added: “The independent songwriter community, through its own strong voice, is united in its efforts to lead the fight for fair compensation for creators and copyright owners in the current mechanical royalty rate hearings. Songwriters stand shoulder to shoulder with their music publisher partners in this struggle, and will brook no attempts – whether instigated by foes or professed but conflicted allies – to unduly influence or disrupt our efforts to guarantee equity over extinction for music creators.”

The initial hearing will last four weeks, with the three permanent Copyright Royalty Judges hearing arguments Mondays through Thursdays from 9:30 a.m. – 4:30 p.m. each day. At the conclusion of the initial hearing, there will be more discovery, followed by a rebuttal hearing in May, and a final decision expected on October 2.

Leave a Comment