The seemingly mundane deliberations over future mechanical rights royalty rates in the US are starting to feel like a Verdi opera — with colorful industry titan Irving Azoff and his Global Music Rights (GMR) playing an unexpected cameo role. But why are major streaming platforms so intent on removing GMR from the Phonorecords V rate-setting process?
That’s a question with a very simple or very complicated answer — depending on who you’re talking to.
Previously, Digital Music News first reported that Irving Azoff’s Global Music Rights (GMR) was curiously getting edged out of the Phonorecords V rate-setting process in the US. The deliberations, which focus on mechanical publishing license rates for multi-year blocks, are now a critical part of the royalty landscape for streaming platforms, publishers, songwriters, artists, labels, and heavily financed music IP acquisition giants.
They’re also a venue for some high-stakes hijinks, with Spotify emerging as the evil genius in the last round with its royalty-chopping ‘bundling’ loophole. Now, it turns out that Spotify is part of a streaming cabal removing GMR from the card table entirely — just as the negotiations are getting started.
But why remove GMR — and more importantly, why did Irving Azoff & Co. agree to ‘withdraw’?
At first, sources pointed DMN to maneuvering by mega-publishers and the National Music Publishers’ Association (NMPA). That’s still the assertion of multiple sources to DMN, though recent legal documents suggest otherwise.
In a recently filed Phonorecords V motion shared with DMN (and available here), streaming platforms Spotify, Apple Music, Amazon Music, Pandora (owned by SiriusXM), and YouTube Music owner Google expressly moved to extricate GMR from the rate-setting process.
The stated reason? Global Music Rights oversees performance rights, not mechanical rights.
“GMR is a performing rights organization (‘PRO’) representing songwriters and composers in the licensing of public performance rights,” the filing clearly asserts. “GMR thus lacks the ‘significant interest’ required to participate in this proceeding, which will set rates and terms for a distinct set of rights—mechanical rights under Section 115 of the Copyright Act.”
Sounds simple enough until one considers how intricately intertwined mechanical and performance licenses are, particularly for on-demand streaming. These formulas get very complicated very quickly, though any changes in mechanicals impact performance rates when both rights are present (for example, in on-demand streaming plays). That makes GMR’s interest more than academic, suggesting more complicated maneuvering is at play.
On that thread, dealmakers chatting with DMN pointed to a desire to remove the hard-hitting Irving Azoff from the process entirely.
Indeed, Azoff has a well-earned reputation as a fierce negotiator for the artists he represents. According to one source, Azoff is ‘‘very powerful and very good at negotiating increases in royalty rates,” which makes his absence convenient.
But peeling back the riddle reveals a conundrum. For starters, sources were quick to point out that Azoff is still part of the rate-setting group, specifically as a leader within the Music Artists Coalition (MAC). But one insider questioned whether the hard-hitting Azoff is truly engaging in this battle, or letting the matter slide. That might also explain GMR’s quiet and official ‘withdrawal’ from the process.
Separately, it’s worth recounting that Azoff sold off a very large percentage of GMR back in ’24. But Azoff is understood to be heavily involved in the day-to-day operations at GMR, and the upstart PRO has triggered a number of arduous, protracted battles with radio stations (including the Radio Music Licensing Committee, or RMLC) over the years.
Exactly how major publishers and the NMPA factor into all this drama — if at all — remains a bit unclear.
According to the above-referenced filing, the NMPA expressly states that it ‘takes no position on this motion,’ and the Nashville Songwriters Association International (NSAI) offers the same disclaimer. As a certain 90s rap duo, Tag Team, might opine, ‘Whoomp! There It Is’, though detractors assert that the move to push GMR goes beyond a simple cabal of streamers.
As one might expect, nobody at GMR, the streaming platforms, the NMPA, or NSAI has been willing to speak on the record about the sensitive negotiation process.
As first reported by Digital Music News, the major record labels, alongside the NMPA, NSAI, MAC, and the American Association of Independent Music (A2IM), have now informed the Copyright Royalty Board (CRB) of a proposed Phonorecords V settlement for a range of non-streaming formats.
The initial agreement, which specifically covers US-based mechanical rates for physical formats, ringtones, and permanent downloads from 2028 through 2032, proposes leaving the existing Phonorecords IV structure unchanged, except for continuing annual inflation or cost-of-living adjustments as calculated by the Consumer Price Index.
The proposal, which can be viewed in its entirety here, sparked immediate vocal opposition from independent advocates and creators, including the Songwriters Guild of America, Word Collections, Eminem’s publisher Eight Mile Style, and copyright activist George Johnson. These parties declined to join the settlement and are actively preparing to file formal objections to demand a higher, material composition rate of 15.65 cents per track rather than a modest inflation-adjusted growth rate.
And on that note, the aforementioned ‘Subpart B’ proposal will be officially posted by the CRB for ‘comment and objections’ in a matter of days according to negotiators speaking with DMN.
Subpart B includes a range of non-streaming formats, including physical formats, downloads, and ringtones, with physical formats spanning vinyl, CDs, cassettes, and even fringe formats like 8-tracks part of the mix. According to a draft publication shared with DMN, it’s unclear exactly when those comments and objections are due, though the official proposal is expected to be published on July 10th or soon thereafter.
Stay tuned for more rate-setting details (and drama) as they emerge.
