This subject came up a few months ago, and as I own a music publishing company, I thought I would share an email I received today from the president of the National Music Publishers' Association. This letter tells what is currently going on in the music industry with regard to the record companies and digital downloads. Keep in mind that in most cases, the music publisher splits the royalties it collects 50/50 with the songwriters. This gives you a good idea of how little of the money that you pay for a track of music actually finds its way to the songwriter, and how the record companies want to lower this rate even more:


On Monday, January 28, the Copyright Royalty Board (CRB) begins the hearing that will determine mechanical rates for every songwriter and music publisher in America. It will be the most important rate hearing in the history of the music industry because in addition to setting rates for physical products, rates will be set for the first time ever for digital products such as digital downloads, subscription services and ringtones.

The National Music Publishers' Association (NMPA) will be representing the interests of songwriters and music publishers and will be fighting vigorously to protect those interests to ensure that musical compositions are compensated fairly.

On the other side of this fight stands the Recording Industry Association of America (RIAA) and the Digital Music Association (DiMA). Both the RIAA and DiMA have proposed significant reductions in mechanical royalty rates that would be disastrous for songwriters and music publishers. This is literally a fight for the survival of our industry.

To give you an example of what is at stake, the current rate for physical phonorecords is 9.1 cents. The NMPA is proposing an increase to 12.5 cents per song. The RIAA, however, has proposed slashing the rate to approximately 6 cents a song - a cut of more than one-third the current rate!

For permanent digital downloads, NMPA is proposing a rate of 15 cents per track because the costs involved are much less than for physical products. The RIAA has proposed the outrageous rate of approximately 5 - 5.5 cents per track, and DiMA is proposing even less.

If you find that troubling, it gets worse. For interactive streaming services, which some analysts believe will be the future of the music industry, NMPA is proposing a rate of the greater of 12.5% of revenue, 27.5% of content costs, or a micro-penny calculation based on usage. The RIAA actually proposed that songwriters and music publishers should get the equivalent of .58% of revenue. This isn't a typo - less than 1%. And DiMA is taking the shocking and offensive position that songwriters' and music publishers' mechanical rights should be zero, because DiMA does not believe we have any such rights!

The initial hearing will last four weeks, with the three permanent Copyright Royalty Judges hearing arguments Mondays through Thursdays from 9:30 am - 4:30 pm each day. At the conclusion of the initial hearing, there will be more discovery, followed by a rebuttal hearing in May, and a final decision expected on October 2.

The NMPA will be spending millions dollars in this proceeding to protect the interests of songwriters and music publishers against the much larger record labels and digital media companies. And although we face such an enormous fight, we have an incredible advantage - we represent songwriters, without whom the record labels and digital music services could not exist.

Please forward this to anyone who is involved in the songwriting and music publishing industry. We will be sending out regular updates as the CRB progresses to keep you informed. Through your networks, we hope to reach the vast majority of the industry. If you did not receive this directly, and would like to be added to the master NMPA communications list, please send your contact information to Jamie Marotta at [email protected].

As always, we appreciate your support of the NMPA which allows us to wage this fight on your behalf.

David M. Israelite
President & CEO
National Music Publishers' Association

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