The board of Round Hill Music Royalty Fund says that it welcomes the news that the US Copyright Royalty Board (CRB) III ruling has been upheld, allowing the royalty rates for songwriters and publishers to be paid at the increased headline rate of 15.1%, which comes into effect from 1 January 2022. The headline rates over the past 5 years have been confirmed as:
- 2018 11.4%
- 2019 12.3%
- 2020 13.3%
- 2021 14.2%
- 2022 15.1%
Over the past five years, revenues owed to copyright owners have been paid at the CRB Phono Mechanical II rate of 10.5%, therefore the company can expect to receive backdated royalty payments for the period in question. The streaming services have been informed of the changes and have 6 months to pay the uplift in rates to the Mechanical Licensing Collective (MLC) who will backdate the royalty payments to music publishers. It should be noted that the streaming services have asked for an extension of the 6 month accounting period. Round Hill Music says that it will robustly defend the CRB’s decision and is highly supportive of the outcome.
Digital Service Provider (streaming) revenues make up a significant proportion of the fund’s total revenue base. The ruling will require the MLC to process a significant number of additional streaming service royalty statements covering the royalty uplift from 2018 to date. Round Hill Music says that it is liaising closely with the MLC to work through the details of the past accountings and agree principles on how to handle processing income where rights holders may have changed since 2018.
Josh Gruss, CEO of Round Hill commented: “We are delighted to see the CRB appeal overturned in favour of increasing the royalty rates, per the original CRB ruling. The company has been acutely aware for some time that songwriters and publishers have been disproportionately paid by streaming services in the USA and this ruling goes some way to address the imbalance. The CRB IV negotiations for the next five year period from 2023 to December 2027 have now commenced, with the writers/publishers asking for a mechanical streaming royalty rate of 20%, something that we hope will come to pass when the times comes.
We have continually voiced our support for National Music Publishers’ Association (NMPA) and applaud its tireless lobbying on behalf of all writers and publishers for fairer pay from digital service providers.”
[Hipgnosis said yesterday that the extra revenue from the decision was already reflected in its NAV but had been allocated to the capital account rather than to the revenue account, pending the outcome of this decision. Round Hill has not clarified its position, but we’d expect that it is the same.
Both funds’ share prices have lagged their NAVs over the past few months. It is not obvious why, but we wonder if people are expecting that revenue from streaming services (like Spotify) has been falling in a similar way to revenue from TV subscription services like Netflix. Spotify will be announcing figures later this month which should either confirm that suspicion or allay it. Either way, because of the long lag between the funds earning revenue and being paid it, the time it takes to bed in new catalogue acquisitions, and the extra revenue from the Copyright Board, we’d still expect that these funds’ revenue to continue to rise for a while yet.]
RHM : Round Hill comments on copyright decision