@edchristman: Proposed Mechanical Rates to Stay Flat, Not Indexed

At the annual National Music Publishers Assn. convention Wednesday (June 8), held at the Marriott Hotel in Times Square, NMPA president David Israelite announced that music publishers have reached a settlement on mechanical licenses with two of the three majors, Universal Music Group (UMG) and the Warner Music Group (WMG). Terms of the settlement weren’t disclosed, and the deal still needs to be submitted to the Copyright Royalty Board (which began the rate-setting process on mechanical royalties for songs and albums on Jan. 5).

During the meeting, NMPA president David Israelite announced the agreement. “Five hours ago, we have settled with Universal and Warner for the CRB” rate-setting process, for the period of 2018-2022. He thanked WMG and UMG executives for recognizing that the industry should work together and not fight over slices of the pie.

Sources tell Billboard it will keep mechanical rates flat for track downloads and CDs and that the mechanical rate, if approved by the CRB, would remain at the current rate of 9.1 cents per song; and 24 cents for ringtones….

In another part of the settlement, the two majors have agreed to sit out the rate-setting process for streaming services, which means that publishers will be left to contend with digital services in front of the CRB’s judges, sources say. Independent label groups, chiefly A2IM and Merlin, have also chosen to sit out the rate setting proceedings, according to one source.

Sources argue that Sony is sitting out the settlement because it is worried that if the publishers are successful in pushing a higher mechanical rate through CRB litigation, it could impact the rates services are willing to pay the labels in direct licensing deals.

Read the post on Billboard.

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