US music streaming providers such as Apple Music, Amazon Music Unlimited and Spotify are bracing for the imposition of higher royalty charges over the next five years after the body charged with setting copyright fees decreed that they must cough up more for the use of artist's work.
The Copyright Royalty Board of the U.S. Library of Congress decision will come as music to the ears of songwriters and music publishers but is likely to strike an off-key note with streaming providers, who must now hand over a greater part of their revenues.
Details of the changed royalties formula have not yet been made public but The National Music Publishers Association has already said it will mandate that streaming firms hand over 15.1% of their revenue to songwriters and publishers, up from just 10.5% today.
Higher outgoings will now become a fact of life for all streaming providers who must pay up for higher licensing fees to publishers, who collect money on behalf of their recording artists in exchange for an agreed commission.
The CRB is formed from three judges who have been handed the authority to set rates by the US government – individual publishers have no power to negotiate their own rates.
Earlier this month Spotify found itself hauled before the courts after being sued for $1.6bn by Tom Petty's publisher for using songs without the proper license.