George Johnson has submitted formal comments to the United States Copyright Royalty Board (CRB) urging it to reject the proposed Phono V settlement, which would set statutory mechanical rates for permanent downloads, physical formats, ringtones, and bundles from 2028 through 2032. His filing adds to objections from Eight Mile Style, Word Collections, the Songwriters Guild of America (SGA), and Stevie Wonder.
The CRB is in the process of setting those rates. In late June, the major labels, the National Music Publishers’ Association (NMPA), the American Association of Independent Music (A2IM), and others filed a proposed settlement with the board. The signatory entities said the rates “should not be amended except for continuing inflation adjustments.”
Objections to the proposed rates#
The Songwriters Guild of America and Word Collections highlighted that the Phono V settlement proposal includes a 2028 base rate of 12 cents, down from 13.1 cents at present. Johnson argued that the proposed download and physical rate “is equally inadequate” because it “fails to fully account for inflation.” He said Phono IV’s base rate accounted for inflation only through the end of 2020, not during the highly inflationary 2021-2022 period.
On ringtones, Johnson said holding “the perpetually static ringtone rate” steady at “24 cents for 19 years from 2009 to 2028 is clearly unreasonable.”
Johnson’s rate positions are:
- Ringtone rate: 39.1 cents, instead of holding the rate at 24 cents from 2009 to 2028.
- Download and physical per-work rate: 15.65 cents, compared with the settlement’s suggested 12 cents for 2028, down from 13.1 cents at present.
“The Settlement should also be declined on their ‘static’ ringtone proposal alone,” he wrote.
Self-dealing allegations#
Johnson also criticized what he called “vertical integration and extreme self-dealing between the 3 major labels and their 3 major publishing affiliates.” He wrote, “The 3 major labels have gamed the system by misusing the compulsory license and dominating rate-setting. Furthermore, since the 3 major record labels are negotiating with their own vertically integrated 3 major publishing companies, and inside a public governmental rate-setting tribunal, they’re clearly not negotiating in a free market.”
Johnson described the royalty-limiting controlled composition clause as “literally the first ‘end run’ around the statutory rate in 1978” and as “no different than the ‘private contract’ MOU in Phonorecords IV” (MOU refers to a memorandum of understanding). He also alleged that the Recording Industry Association of America (RIAA) and the NMPA failed to engage in good-faith negotiations with the Phono V settlement objectors. “NMPA did not even show our proposal to their board members publishers who did not get a chance to vote on it,” Johnson wrote.
“NMPA and RIAA’s self-dealing remains a brazen fraud, just like their intentional fraud of not including the years 2021 and 2022 in their second voluntary settlement in Phonorecords IV,” he added.
Next steps#
As ordered by the CRB, the same participants and those involved with other rate-setting proceedings have until August 30th to “submit a joint proposed schedule” covering hearing dates and more.
