US Phonorecords V Settlement Draws Multiple Objections

In the United States, a proposed settlement that would keep mechanical royalty rates for physical formats and permanent downloads largely unchanged under Phonorecords V is facing a wave of formal objections from songwriters, publishers, and a copyright activist.

The settlement, submitted in late June to the Copyright Royalty Board (CRB) by major labels, the American Association of Independent Music (A2IM), the National Music Publishers’ Association (NMPA), the Nashville Songwriters Association International, and the Music Artists Coalition, recommends that existing Phonorecords IV rates continue without amendment beyond standard inflation adjustments. A public comment period on the proposal closed on 10 August, drawing both support and sharp criticism.

Support for Stability

Several organisations endorsed the proposed rate freeze. Songwriters of North America (SONA) described the settlement as “a reasonable and practical resolution that preserves the important progress achieved during the Phonorecords IV proceeding.” The Recording Academy said the framework provides “a level of stability and predictability that are fundamentally essential to the livelihoods of songwriters and composers.” The Association of Independent Music Publishers (AIMP) called it “a step in the right direction” and “a significant boon for the independent music publishing community.”

Objections from Songwriters and Publishers

Not all parties agreed. The Songwriters Guild of America (SGA) and Word Collections, led by Rick Carnes and Jeff Price respectively, filed a detailed 20-page joint objection. They argued that the settlement, while allowing for cost-of-living adjustments, would effectively reset the base mechanical rate to 12 cents per work on 1 January 2028, rather than continuing from the 2026 rate of 13.1 cents or a higher adjusted figure.

“Most comments submitted so far completely ignore the fact that the proposed deal seems intended to ensure that the ‘new’ Phonorecords V base rate will NOT begin at the current rate of 13.1 cents or more, but would in reality be lowered back to a reset rate of 12 cents on January 1, 2028,” the filing stated.

The SGA and Word Collections also said they had “extremely limited” contact with the settling parties before the proposal was submitted, despite their “willingness to engage” in discussions. They asked the CRB to reject the settlement and recommend that all participants “reconvene to negotiate at arms-length” on reasonable terms. Their calculation, accounting for cumulative cost-of-living shifts since 2020, would place the rate at approximately 15.6 cents per work for physical and permanent downloads, with annual upward adjustments thereafter.

Copyright Activist’s Critique

In a separate filing spanning nearly 50 pages, copyright activist George Johnson, writing as Eight Mile, criticised the proposed rate as “still way below-market.” Johnson examined historical mechanical royalty trends and highlighted what he described as “extreme self-dealing between the 3 major labels and their 3 major publishing affiliates.”

“The corporate overlap between the bloc of the Settlement Parties comprised of the Majors (effectively an oligopsony) and their vertically-integrated publishing company affiliates which serve as executive members of the NMPA, results in a walled garden where the ‘willing buyers’ and ‘willing sellers’ are the same at the corporate level,” Johnson wrote. He also pointed to the controlled composition clause in recording agreements, which he said “reduces the mechanical royalty by 25% and fixes the rate at the time of release.”

The SGA and Word Collections concluded their filing by stating: “While being disheartened by this turn of events, we remain open and willing to participate in further voluntary Subpart B and Phonorecords V discussions. We are, however, quite sure that what has transpired so far is not the type of good faith communication and fair dealing that Congress had in mind in extending an antitrust exemption to enable private negotiations among parties participating in royalty rate-setting proceedings, especially those proceedings characterized by demonstrable conflicts of interest through vertical integration as already noted by the CRB in Phonorecords IV.”