The United States Copyright Royalty Board is weighing new mechanical royalty rates for streaming from 2028 through 2032, a process known as Phonorecords V (Phono V), and the outcome could reshape how songwriters value their catalogs.
Earlier this year, streaming services, labels, songwriters and publishers opened the Phono V proceedings before the board. The process is split into two tracks: one sets mechanical rates for physical formats such as vinyl, CDs and permanent downloads, and the other determines how streaming platforms calculate and pay statutory mechanical royalties to songwriters and publishers in the United States from 2028 through 2032. The proceeding builds on Phono IV (2022), which delivered meaningful gains for songwriters and publishers, and will reassess how subscription revenue is allocated and mechanical royalty rates are structured. When the formula to calculate royalties changes, it affects immediate revenue and expected future revenues, which are the primary driver of music catalog valuations.
Labels and publishers reached a proposed settlement on physical and permanent download rates on June 29, which is now subject to further review by the Copyright Royalty Board. The larger streaming royalty question remains unresolved. Streaming services, songwriters and publishers will file formal submissions on October 5, with the board’s determination due by the end of 2027.
Bundling and the push to renegotiate#
One key issue in Phono V is bundling. The practice drew attention in March 2024, when Spotify added audiobooks to its plans and reclassified its duo, family and premium subscriptions as bundles, allowing lower mechanical royalty payments under the prior Phono IV framework. Other streaming services followed.
The National Music Publishers’ Association (NMPA) estimates bundling has cost publishers and songwriters nearly $500 million since 2024, and could cost more than $3.1 billion between 2028 and 2032 if rates remain unchanged. Renegotiating bundling provisions is therefore a key priority in the proceedings.
Three reasons Phono V matters for catalog values#
Phono V matters for three main reasons:
- Royalty rate changes: Even small rate shifts can materially affect long-term earnings. United States publishing revenue growth slowed to around 3.7% in 2025, down from double-digit growth the year before.
- Catalog valuation pressure: A catalog’s value largely depends on expected future royalties. When prospective regulatory changes make those royalties uncertain, valuations can face downward pressure.
- Timing: Buyers and investors dislike uncertainty. Selling a catalog before new rates are confirmed can mean settling on a more conservative price that builds in that risk.
The Phono V negotiations are not abstract policy for songwriters; they directly affect the present and future value of their catalogs.
Catalog sales versus royalty financing#
Despite the moving pieces, confidence in music catalog investments remains strong. Major artists including the Red Hot Chili Peppers and Britney Spears sold catalogs for substantial sums in the last year, and the extended market is also highly active.
Motivations can include liquidity, estate planning, diversification or funding new ventures. Selling a catalog is not the only path to raising capital. Royalty financing allows music creators to unlock capital by leveraging future royalty income without giving up ownership or control of their intellectual property. The choice of whether to sell a catalog to unlock its monetary value or to leverage its annual earnings with short-term financing is a complex decision artists and songwriters will face.
As Phono V negotiations unfold, that distinction becomes especially important. If rates increase, bundling provisions change and uncertainty resolves, royalty projections and valuations could strengthen. Songwriters considering a catalog sale might wait; depending on their individual circumstances, they may be better off retaining ownership while accessing alternative capital during this transition period. Additional creative output in that time can further increase valuation.
Every situation is nuanced, but understanding available options before making a permanent decision is essential, particularly when the rules governing royalty income are being reshaped.
Phono V proceedings are technical, complex and slow-moving, but they are foundational to the streaming economy. The outcome will shape how mechanical income is calculated and how subscription revenue flows for years to come. In this transition period, songwriters are advised to focus on what they can control: knowing their catalog in detail and understanding platform concentration, such as whether it over-indexes on a single digital service provider (DSP) or in certain regions, and the balance between performance and mechanical royalties.
