Songwriters and publishers were scheduled to receive a royalty increase for music sales beginning in 2024. The adjustment applied to physical sales, including vinyl, cassettes, and CDs, as well as digital downloads.
According to a document published in the Federal Register on Tuesday, Dec. 12, the Copyright Royalty Board increased the U.S. statutory mechanical royalty rate. For songs with a run time of five minutes or less, the rate moved from 12 cents to 12.40 cents. For songs exceeding five minutes, the rate was set at 2.39 cents per minute. This rate change was based on the Consumer Price Index for All Urban Consumers published by the Secretary of Labor.
These publishing royalties are paid by record labels to songwriters and publishers for compositions licensed for sound recordings that are sold via digital downloads or physical copies. This differs from U.S. mechanical royalties for streaming, which are paid by platforms such as Spotify, Apple Music, and Amazon Music to publishers and songwriters.
The shift toward cost of living adjustments has been a point of discussion regarding U.S. mechanical royalty rates. Prior to January 2023, the minimum statutory mechanical rate in the United States had remained at 9.1 cents since 2006. A rate increase in January 2023 represented a 32% increase.
NMPA president and CEO David Israelite stated that the Copyright Office approved a Consumer Price Index increase for physical products like vinyl records and digital downloads. He noted that the NMPA, the Nashville Songwriters Association International, and others worked to raise these mechanical royalties from 9.1 cents to 12 cents prior to the adjustment.
The decision to increase the rate followed a period where the NMPA and labels had initially reached a settlement for the 2023-2027 term that kept the rate at 9.1 cents. However, after opposition from songwriter advocates like George Johnson, the Songwriters Guild of America, and Music Creators of North America, the CRB judges overturned that settlement. A subsequent agreement between publishers and major labels established a 12 cent penny rate that included a cost of living adjustment.
