An increase in the mechanical royalty rate has been proposed. Major record label members of the Recording Industry Association of America, members of the National Music Publishers Association and the Nashville Songwriters Association International reached an agreement on the increase and presented a motion to the Copyright Royalty Board. The proposals increases mechanical royalties related to physical products, downloads, ringtones, and music bundles. A mechanical royalty is a royalty earned through the mechanical reproduction of a copyrighted musical work.
The proposed change will be an increase from 9.1 cents per track to 12 cents per track, an increase of 32%! This would be the first major increase in mechanical royalties since 2008. If approved by the Copyright Royalty Board, this change will go into effect in 2023 and will run through 2027. The rate increase will also automatically index to the consumer price index, meaning that the rate could be adjusted each year at the same rate as inflation. The rate increase would mark a big win for songwriters and publishers who have long argued that creators are not compensated fairly for their contributions to a song or recorded work. This comes at a great time in the music industry as physical sales of vinyl and CDs are making a comeback and have been steadily increasing over the last few years.
So what’s next? The Copyright Royalty Board, which is a three member panel of copyright royalty judges who determine rates and terms for copyright statutory licenses and royalties, will review the proposal and approve or deny the increase. Stay tuned! If you have any questions about how this may impact you, or anything else about music or copyrights, please reach out to us at Creative Law Network!