Amazon Wants to Pay Songwriters Less. Spotify and Apple Want a Freeze. The Writers Want 20%. Here's the Phono V Fight in Plain English

Every rapper who writes their own bars and every R&B singer who writes their own hooks is a songwriter. And right now, in a federal proceeding most of them have never heard of, the streaming giants are arguing about how much to pay them for the next five years.

What Phono V is

Phonorecords V is the U.S. Copyright Royalty Board proceeding that will set the mechanical royalty rates on-demand streaming services pay songwriters and music publishers for the five years starting Jan. 1, 2028, Music Business Worldwide reported. Spotify, Apple, Amazon, Pandora and Google filed their proposals on Oct. 5, with public, redacted versions following Oct. 7.

Quick explainer: record labels negotiate their streaming deals directly. Songwriters and publishers mostly don't get that option. Their mechanical royalties are set by the board under a compulsory license, MBW explained.

Where the rate is now

Under the Phonorecords IV settlement, accepted in December 2022, the headline rate rises in steps from 15.1 percent of service revenue in 2023 to 15.35 percent in 2027, and stands at 15.3 percent this year, according to MBW. That headline number is "all-in": services subtract what they pay for performance rights, and what's left is the mechanical royalty.

What each side wants

Spotify, Apple, Google and Pandora want the 2027 rates, including the 15.35 percent headline rate, kept in place from 2028 through 2032, MBW reported. Spotify's filing argued: "The best evidence of what willing buyers and willing sellers would agree to is what they actually did agree to, just four years ago."

Amazon wants a cut, to 13.4 percent for every type of service other than bundles, MBW reported. Its filing said its economist's calculations "yield rates that are about 13% below Phonorecords IV levels."

The publishers and songwriters, through the National Music Publishers' Association and the Nashville Songwriters Association International, want services to pay the greatest of 20 percent of revenue, 40 percent of what they pay record labels, $2.40 per subscriber a month, or $0.004 per play, according to MBW.

The trash talk

NMPA chief David Israelite went straight at Amazon in a video, Digital Music News reported. "Now we know in writing what the major streaming services think songwriters are worth," he said. "And the winner is — we have an upset — Amazon Music." He called it "a company with a market cap of $2.8 trillion, with $717 billion in annual revenue," that wants "to squeeze songwriters the most."

The bundle fight

The biggest fight since the last deal is bundling, MBW reported. In March 2024, Spotify reclassified its U.S. Premium tiers as bundles that include audiobooks, which cut the mechanical royalties it pays. The Mechanical Licensing Collective sued, and that case is still going. The publishers' filing says Spotify has taken "more than $500 million in mechanical royalties that should have been paid to songwriters and publishers." Spotify's own filing puts potential liability at about €473 million if the MLC wins entirely, partially offset by direct publisher deals, according to MBW.

Why rap and R&B writers should care (analysis)

My analysis: rap and R&B songs are often written by the artists themselves, plus a lot of co-writers and producers who split the publishing. When the rate moves even a fraction of a point, it moves across billions of streams. A freeze for five years, while subscription prices rise, means writers fall behind. A cut means they fall behind faster.

Spotify's economist puts U.S. inflation from June 2022 to June 2026 at about 13 percent, MBW reported, while arguing subscription prices have outpaced it. Apple's economist argues a percentage-of-revenue rate already rises with price hikes. Both arguments assume the revenue the rate applies to stays honest, which is exactly what the bundle fight is about.

My take (opinion)

My opinion: a freeze isn't neutral. Five years of no raise in a growing business is a pay cut with better PR. Independent writers should register their songs so they actually collect whatever rate gets set.

What we still don't know

Where the board lands, whether the parties settle the way they did in 2022, and whether the Spotify bundle lawsuit is resolved first. Follow the case on the CRB's docket, and if you've never registered your songs with a publisher or the MLC, fix that this week.