Spotify has proposed a 15.35% headline statutory mechanical royalty rate throughout 2028-2032, retaining existing terms, including provisions governing subscription bundles.
The proposal forms part of the Phonorecords V proceeding before the Copyright Royalty Board (CRB), which will determine statutory rates for on-demand streaming.
Platforms seek continuity
Spotify, Apple Music, Pandora and other members of the Digital Media Association (DiMA) submitted detailed statements outlining their proposals.
The platforms broadly argue that the negotiated Phonorecords IV settlement has worked and should continue through Phonorecords V. A separate, contested proceeding covers physical formats and permanent downloads.
Spotify’s submission gives little attention to inflation. Word Collections, the Songwriters Guild of America and others have sought annual inflation adjustments.
Spotify defends bundle terms
Spotify supports retaining provisions that allow services to reclassify subscriptions combining multiple products as bundles, reducing mechanical royalty payments. Copyright owners dispute the platforms’ assessment of those terms.
Spotify’s filing says Phonorecords IV gave copyright owners “the highest headline statutory mechanical royalty rate in the history of the statutory license”.
It also argues that participants, including the National Music Publishers’ Association (NMPA), understood the bundle provisions when negotiating the settlement.
Spotify says copyright owners sought better bundle terms during both the Phonorecords III litigation and the Phonorecords IV proceeding.
The company argues that the final agreement improved bundle terms for publishers compared with Phonorecords II and III, alongside the higher headline rate. It says both sides publicly acknowledged bundling as a central element of the settlement.
Beyond its proposed headline rate, Spotify seeks no changes to the current rates, terms or other regulations governing Section 115 statutory licenses.
Pandora requests four changes
Pandora, which remains in a legal dispute with the Mechanical Licensing Collective (MLC), proposes four modifications:
- Revise late-fee provisions, potentially requiring payments from the MLC when services overpay.
- Require the MLC to return mechanical royalties associated with works determined to be in the public domain.
- Exclude accounts generating artificial streams from royalty calculations.
- Exclude app-store fees from revenue used to calculate royalties.
On app-store fees, Pandora argues that it should not owe royalties on revenue it does not receive.
