The United States has opened its next formal review of mechanical royalties for streaming and sales, a process that will set songwriter and publisher payouts from 2028 through 2032. The Copyright Royalty Board (CRB), a three-judge panel, began the streaming portion of the proceeding on Monday (Oct. 5), and participants do not expect a short fight.
What is a mechanical royalty?#
A mechanical royalty is owed to musicmakers when their songs are reproduced into a different medium. The term predates recorded music, when songs were copied onto cylindrical rolls for player pianos.
Today the royalty applies to physical formats such as vinyl records, cassettes and CDs, as well as digital reproductions on streaming services and digital stores like iTunes.
The United States is the only country that regulates this royalty type through the CRB process. Elsewhere, rates are set through free market negotiations between the payer and the recipient. The National Music Publishers’ Association (NMPA), the trade body for U.S. music publishers and a major participant, has long argued for abolishing the practice. In 2024, it sent a letter to Judiciary Committee leadership in both the U.S. House of Representatives and the Senate asking for an overhaul.
Phonorecords V begins#
Every five years, the CRB reconsiders the mechanical rate. The new cycle, called Phonorecords V or Phono V, is the fifth such review. Its outcome will set U.S. mechanical rates for sales and streaming from 2028 through 2032.
The sales and streaming portions are separate. The sales side has been underway for months; the streaming side began Monday. Streaming is the most widely used listening format and is the central focus of the current CRB work.
In the U.S., mechanical royalties account for about half of the money paid to music publishers and songwriters for on-demand audio streams. The other half is a performance royalty, which is set through a separate process.
Direct cases and likely positions#
At midnight, all participants, including each streaming service, music publishers and some songwriter representatives, will submit documents detailing their preferred rate. In CRB terminology, this is a direct case.
Streaming services generally request rates that remain the same or become more favorable to them, meaning lower payments to songwriters and publishers. Publishers and songwriters typically ask for higher rates.
The direct cases are mandatory for any party taking part in Phono V. The filings are expected to be published online within one to three business days, though some portions may be redacted.
Because rates are reconsidered only every five years, music and streaming companies devote substantial money and resources to these proceedings.
Trial, settlement and timeline#
After reviewing the direct cases, CRB judges are expected to hold a formal trial in the first half of 2027 to determine the rate. In past cycles, more than half of CRB proceedings covering both sales and streaming did not reach trial because stakeholders agreed on a settlement.
This time, a settlement appears unlikely. The NMPA and songwriters have expressed distrust of Spotify, which they say has harmed them in several past proceedings.
A resolution is due by the end of 2027, with the new rate effective from Jan. 1, 2028 through the end of 2032. There is precedent for longer timelines. The streaming side of Phonorecords III, covering 2018-2022, was finalized only after that period ended. Streaming services then had to amend their royalty payments for those five years and issue nearly $400 million in payment corrections.
Key participants#
On the music industry side, the NMPA represents most major and independent publishers and is usually the most vocal participant. The Nashville Songwriters Association International (NSAI) represents songwriters and generally aligns with the NMPA.
Streaming services file direct cases individually rather than through a trade organization. Likely filers include:
- Spotify
- Apple
- Amazon
- Google (YouTube)
Other parties may also submit, including independent songwriter George Johnson, the Songwriters Guild of America (SGA) and the Music Artists Coalition (MAC). Their positions do not always align with those of the NMPA and NSAI.
