4th Jul 2022 13:05
(Alliance News) - Hipgnosis Songs Fund Ltd hailed the "victory" for songwriters in the music industry after streaming platforms lost their appeal on the Copyright Royalty Board III Judgement.
The US Copyright Royalty Board on Friday announced a determination in the Phonorecords III remand proceeding, favouring songwriters and publishers.
In 2018, the CRB ruled that songwriter/publisher royalty rates for streaming and other mechanical uses were to rise significantly in the US. The CRB raised the percentage figure to 15.1%, up from 10.5% across the five years between 2018 and 2022. It was the largest rate increase in the history of the CRB.
However, streaming services like Spotify and other companies, including Amazon.com Inc and Google Inc subsequently launched a legal appeal against the new rates, arguing that they were unjustified.
On Friday, the CRB reaffirmed the 15.1% headline rate increase.
Hipgnosis on Monday said it welcomed the US Copyright Royalty Board's decision to disallow an appeal by various streaming services.
The appeal was against the copyright royalty board decision to increase mechanical streaming royalty rates for songwriters and publishers.
With the appeal disallowed, there will be an increase in statutory minimum rates for streaming paid in the US.
It will be an incremental increase covering the period starting from January 1, 2018 and ending December 31, 2022, and will culminate in a 44% uplift in mechanical and performance rates.
The Guernsey-registered music intellectual property investment and song management company founded by Merck Mercuriadis and Nile Rodgers in 2018.
Hipgnosis was founded on the notion that hit songs are long-term predictable assets unaffected by economic cycles that will increase in value as the worldwide music streaming market grows.
In addition to acquiring songs and songwriter catalogues, the company manages the playlist, cover, interpolation, and synchronization revenues of its IP.
Commenting on the decision, Mercuriadis said: "We still have plenty of room for improvement before we have a rate that's genuinely fair and equitable but this is an important step on the road to finally, properly recognising the value that songwriters bring to the industry.
"The CRB has delivered a strong message not only to the digital service providers like Spotify but also to the recorded music companies about the importance of the songwriter in our industry. Congratulations to all of the incredible songwriters that have entrusted us with their incomparable songs as well as to each and every songwriter that goes to work each day to write great songs and make the world a better place. This is a victory for all of you."
It boasts an eclectic portfolio of renowned artists such as, 50 Cent, the B-52s, Blondie, Justin Timberlake, Neil Young, Red Hot Chili Peppers, Rick James, Skrillex and the Chainsmokers among others.
"The investment company says this is a win for songwriters but deep down we all know it has a big grin on its face, given it will also benefit from the songs on which it holds royalties. What's unknown is how this will affect valuations for future royalty deals - the potential to earn more money from them would suggest royalties will become more expensive to buy," AJ Bell's Russ Mould added.
Hipgnosis shares were up 1.1% at 109.56p on Monday.
By Arvind Bhunjun; [email protected]
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