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Appeal Ruling on Publisher Royalty Rate Hike Looks Like it Favors Digital Services Contentions: Sources
Aug 8, 2020
Spotify, Amazon, Pandora and YouTube have been handed a procedural victory on their appeal to a 44% royalty rate increase for songwriters and publishers, sources tell Billboard .
The U.S. Court of Appeals in D.C. that reviewed the digital services' appeal on the Copyright Royalty Board's (CRB) mechanical rate determination has thrown out the rate structure cobbled together by a majority of the board's three judges, Billboard has learned.
The ruling, which is under seal, could wash away the rate increase that the CRB judges -- in a split 2–1 decision -- had awarded songwriters and music publishers in January 2018. The CRB ruling was finalized in February 2019 and appealed by digital services a month later on grounds of procedural issues with how the CRB determined the rates. The appeal court ruling -- which sources say vacated part of the CRB decision and remanded others parts back to the CRB Judges -- likely supplied directions for how to deal with those procedural issues. Yet some sources indicate the appeal court ruling doesn't necessarily prevent the CRB from issuing the same rates, as long as it complies with the Court of Appeal judges' guidelines.
Before the new rate determination, publishers were earning a collective 10.5% of each digital service's revenue. But starting Jan. 1, 2018, that grew to 11.1% with incremental rate increases annually over a five-year period, culminating at 15.1% through 2022. That rate, which currently stands at 13.3% for 2020, is known as the headline rate because it's considered there easiest way to describe the payment owed to rights holders in a complex three-step formula that determines the final rate.
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