The mechanical royalties paid to songwriters and music publishers in the US are undergoing their semi-regular review once again, with judges on the Copyright Royalty Board tasked with deciding what the mechanical royalty rates on physical discs and streams should be from 2028 to 2032.
Mechanical royalties are paid whenever a song or composition is copied, whether that’s copied onto a physical disc or via a digital platform. In the US there is a compulsory licence covering mechanical rights, which obliges writers and publishers to allow third parties to make copies of their songs at rates set by the CRB. Which makes decisions made by the CRB judges really important.
The rates are reviewed every five years. The last review, referred to as ‘phonorecords IV’, covered 2023 to 2027. The current review, called ‘phonorecords V’, will set what is paid between 2028 and 2032.
The rates for physical discs and streams are reviewed through separate proceedings, and the deadline for initial filings to the CRB on streaming rates - from writers and publishers on the one side, and the streaming services on the other - was yesterday.
But CRB judges are already scrutinising a proposal on what the rate should be on physical discs, which is basically a deal between publishers and labels, because it’s usually record labels that pay mechanical royalties whenever CDs or vinyl records are sold. That’s because every time a label presses a CD or record they exploit the mechanical rights in the song.
Given the three majors are both the biggest labels and the biggest publishers, they end up sitting on both sides of that negotiation, which always leads to concerns there is a conflict of interest that drives payments to writers and publishers down - which then has an impact on independent writers and publishers. Though the majors have - as usual - denied that there was any collusion between their left hands and their right hands in a new filing with the CRB last week.
That filing was in response to questions posed by CRB judges over a proposed settlement that would keep the current inflation-linked mechanical rate on physical discs in place. “There is no evidence of any misconduct or any issue arising from conflicts of interest that would justify rejecting the settlement”, the majors tell the judges.
While the three major publishers are all members of the National Music Publishers Association which leads the negotiations on the publishing side, so are - the majors are keen to stress - 300+ independent publishers.
Plus the proposed settlement has been backed by organisations representing individual songwriters and independent labels. So, “the overlapping ownership of a small number of entities did not prevent negotiations from being conducted fairly and at arm’s length”.
Mechanical royalties in the USA: Streams
With streaming, it is the streaming platforms like Spotify, Apple Music and Amazon Music that pay mechanical royalties to writers and publishers. Royalties - at whatever rate the CRB judges set - are paid by the platforms via collecting society The MLC.
This is where the publishers have fought hardest in recent years, seeking to increase what the streaming services pay writers and publishers, at least in line with increases seen in Europe where there are no compulsory licences, and publishers and collecting societies are able to negotiate rates directly with each platform.
Actually, with the phonorecords IV review, the streaming services and publishers reached an agreement on what the rate should be relatively quickly, with that settlement then endorsed by the CRB. Which was in contrast to the previous rate review, where there was a high profile and long-running legal battle between the publishers and most of the streaming services.
The top line streaming rate is a percentage of streaming service revenues. That is currently increasing very slightly each year, starting at 15.1% in 2023 and set to reach 15.35% by next year. Streams also exploit the separate performing rights in songs and whatever is due there via collecting societies like BMI and ASCAP is deducted from the top line mechanical rate.
While the last review of mechanical royalties on streams was relatively drama free, since the current rates were finalised there has been lots of drama.
That’s because of the big bust up between the publishers and Spotify over the bundling discount the compulsory licence allows when a streaming service offers music alongside other content like audiobooks. Spotify added audiobook access to every premium account whether the subscriber wanted it or not, and then subsequently applied the bundling discount to reduce what it pays to publishers and writers.
That prompted much outrage from songwriters and publishers, and litigation filed by The MLC which is still ongoing. Which means with the current CRB rate review, there may be more debate and dispute over the discounts provided by the compulsory licence rather than the actual rate.
We’ll be analysing the submissions made to the CRB on the streaming rate by yesterday’s deadline and will outline key demands and arguments in a future article.
Mechanical royalties in the USA: Discs
When it comes to CDs and vinyl records - and for that matter downloads - it is the label that usually pays the mechanical royalties in the US. Obviously mechanicals income on physical discs is no longer a dominant revenue stream for writers and publishers, although physical sales in the US have been back in growth in recent years. And, according to recent RIAA figures, the record industry’s physical revenues jumped 25.9% in the first half of 2026, accounting for 12% of total recorded music revenues.
Unlike with streaming, the mechanical rate on discs and downloads is a set rate per copy. Which meant prior to 2023, the actual value of the mechanical royalty was going down each year because of inflation.
The phonorecords IV review ultimately addressed that issue by including an inflationary increase each year. Following that review, the rate was 12 cents per copy in 2023, with subsequent annual increases based on the Consumer Price Index cost of living metric. Which means the rate is currently 13.1 cents.
Earlier this year various music industry trade groups - including the National Music Publishers Association and Recording Industry Association Of America - told the CRB they had come together and agreed that the current system should basically be continued from 2028 to 2032, with the same inflationary increases.
That proposal was backed by NMPA on the publisher side, and the majors and indie label repping A2IM on the label side. It was also supported by the Nashville Songwriters Association International and the Music Artists Coalition representing music creators.
However, there are opponents to that proposal, including the Songwriters Guild Of America, rights organisation Word Collections, Eminem publisher Eight Mile Style and songwriter George Johnson, who always follows the CRB proceedings closely and inputs on behalf of his fellow creators.
They raised various issues with the status quo proposal, prompting the CRB judges to ask the various organisations that backed the settlement a series of questions. Answers to those questions were filed with the CRB on Friday.
In their submissions, the publisher, label and creator groups both clarify and defend the status quo settlement. That settlement takes the 2023 rate of 12 cents as a starting point, but - the new submissions are keen to stress - that doesn’t mean anyone is proposing to roll back the rate to 2023 levels.
They write, “to be clear, contrary to the assertions that have been made by some participants and commenters, the proposed settlement does not roll back rates for 2028 to the 2023 rate of 12 cents. Instead the settlement would continue to adjust rates each year to reflect changes in the cost of living”.
Of course, while phonorecords IV addressed the issue that the previous system didn’t factor in inflation, that doesn’t mean everyone agreed the 12 cent per copy rate in 2023 was a fair starting point. Supporters of the current phonorecords V don’t want to re-open that debate, but some of those opposing the status quo proposal do.
Conflict of interest?
Concerns that a conflict of interest at the majors pushes down payments to writers and publishers aren’t only raised in the context of CRB hearings. Some writers and indie publishers have long claimed that that conflict also impacts on what writers and publishers earn from streaming beyond the US.
The alleged conflict is rooted in the fact that with publishing deals most of the money is paid through to the writer whereas with conventional record deals artists receive a minority share of any income. Which means it’s ultimately in the interest of the majors and their shareholders for more money to flow through their record labels than through their publishing divisions.
However, the majors have always strongly denied there is any collusion between their labels and publishers when it comes to licensing streaming services.
They argue that their publishing divisions always seek the best deal for their writers when directly negotiating with streaming services, while also pointing out that - beyond Anglo-American catalogue - it is generally collecting societies rather than publishers that actually negotiate the deals.
But not everyone in the songwriter and indie publisher communities is convinced by those claims. And as AI deals are being negotiated, writers and indies will be scrutinising the deal-making and - if any AI licences follow the streaming model, where more money is allocated to the recording than the song - the alleged conflict of interest at the majors will almost certainly come back into the spotlight.
That said, with streaming in the US, because it’s publishers and streaming services that seek to influence the CRB, rather than publishers and labels, the alleged conflict of interest doesn’t come up in the same way. Even though you could point out that - with streaming services already committing 50-55% of their revenues to the labels and distributors, and with a business model that requires they keep 30-35% of revenue - there is a relatively small share for writers and publishers to claim.
However, with the mechanical royalty on discs and downloads, the conflict of interest issue at the majors is very much in the spotlight. George Johnson stressed this earlier this summer when formally opposing the current status quo proposition.
He told the CRB judges that there is a “patently obvious danger that self-dealing has taken place among the major record companies and their affiliated, vertically integrated publishers, and the trade associations that represent such vertically integrated interests”.
“The result of such conditions is ‘negotiation’ among those with like interests only”, he went on, which means negotiations “conducted via nothing that resembles arms-length bargaining”, resulting in “feigned ‘consensus’ that excludes the participation and quashes the interests of the songwriters and independent music publishers it would bind”.
The National Music Publishers Association, like the labels, hits back at that argument in its latest submission to the CRB, which is also endorsed by Nashville Songwriters Association International and the Music Artists Coalition, who are representing creators in these negotiations.
They write, “the assertion that there is some ‘collusion’ is a canard that is contrary to the documented history of the relationship between the NMPA and record company participants”.
It then adds, “while there is common ownership of the three major music publishers, who are members of NMPA, and the record company participants, the NMPA also represents hundreds of other publisher members, which have no such connection to any of the record company participants”.
And “while the three major music publishers sit on NMPA’s board, so do two songwriters and representatives from over a dozen other publishers, including independent publishers”.
Elsewhere the NMPA notes that the “common ownership of the three major music publishers” has applied at previous CRB proceedings and that didn’t stop there being a “contentious and costly” battle between the publishers and labels over what the rates should be in the mid-2000s.
It also says that, given the sale of physical discs now generates significantly less income overall than streams, if the NMPA is going to embark on any new “contentious and costly” CRB battles, it is sensible to focus on the review of streaming rates. Which is probably true, though it’s helpful that that means going to war with tech companies rather than your own members’ sister label businesses.