In a recent National Music Publishers’ Association (NMPA) announcement, royalty rates to artists on streaming services will be increased over the next period (2018-2022). The Copyright Royalty Board (CRB), who controls these rates, have increased the payout rate from 10.5 percent to 15.1 percent – a 43.81 percent increase. This rate increase will be affecting specifically streaming services like Spotify, Google Play and Apple Music.
While there is no word yet on how these rates will come into effect — whether the intervals will increase over the five year period or all at once — many are hopeful that this rate increase will act favourably towards artists, increasing the potential revenue that gets trickled down from the label. How these payouts work are dependent on “three tier” or “four tier” formulas which means math, and math scares me. Essentially, each formula will produce buckets, three for “three tier” and four for “four tier.” Basically, the higher the revenue payout that comes out of these payouts or “buckets,” is what gets paid to the artist.
To give you a quick understanding of what to expect to go to the label in this payout, during the last five year term, labels received $1 for every $4.76. With the new rate, it’s expected to be $1 for every $3.82. The report also stipulates that fines for late fees for payouts are favoured to be included in the agreement in order to push streaming services to pay labels, and therefore artists, promptly. Which means even more cash for artists.
Don’t worry, you can trust this was not math I did myself, and if you don’t believe me, you can check out the full report here.
Of course, there are some things that have not yet been finalized. Since streaming services use this tier system, there is no note on whether or not the formulas will be modified. The NMPA is pushing for a two tier formula where either $1.06 per subscriber or a $0.0015 per play minimum will be paid out – depending on which bucket is larger.
So, what should we take from all of this? It basically means artists should be getting paid more by streaming services who showcase their music. Which, if that’s the case, is certainly a step in the right direction.