Songwriters Reject 'Unreasonable' Phonorecords V Deal: Fight for 15.65¢ Rates

Seed story: "Word Collections, Songwriters Guild of America, and Several Others Formally Object to the ‘Demonstrably Unreasonable’ Phonorecords V Settlement Proposal" (Digital Music News) · search original Written from facts verified across 3 news report(s) — original explainer, not a copy or translation. Sources listed at the end.

The Songwriters Guild of America and other key industry players have formally rejected the Phonorecords V settlement proposal, arguing that the major labels’ attempt to freeze mechanical rates at existing levels is demonstrably unreasonable for independent creators. This collective pushback highlights a critical moment for freelancers and songwriters to leverage regulatory frameworks and unified legal action to demand fairer royalty structures rather than accepting stagnant, inflation-adjusted terms. As the Copyright Royalty Board reviews these objections, the outcome will set a vital precedent for how intellectual property is valued in the digital age.

The Proposal: A Rate Freeze for 2028-2032

On July 1, 2026, major record labels and tech giants like Apple and Spotify filed a settlement proposal with the Copyright Royalty Board (CRB). This deal aims to lock in Phonorecords IV mechanical rates for physical formats, ringtones, and permanent downloads through 2032. Instead of negotiating a significant rate hike, the agreement merely allows annual adjustments based on the Consumer Price Index (CPI).

For creators, this means their earnings from downloads and physical sales would remain stagnant in real terms, effectively losing value as inflation rises. The current baseline sits at 13.1 cents per work, a figure that objectors argue fails to reflect the modern streaming economy's value. By capping growth at inflation alone, the proposal prioritizes platform stability over creator compensation, leaving songwriters with a predictable but diminishing return on their intellectual property.

Key elements of the proposed framework include:

Rate Preservation: Maintaining the existing 13.1 cent baseline rather than establishing a new, higher statutory rate.
Inflation-Only Adjustments: Limiting increases to CPI metrics, which historically lag behind industry revenue growth.
Broad Industry Support: Backed by major tech platforms and labels, signaling a unified front against higher royalty obligations.

The Backlash: Why Songwriters Called It Unreasonable

The Songwriters Guild of America, alongside Word Collections and Eight Mile Style, formally rejected the Phonorecords V settlement, labeling it "demonstrably unreasonable." Their primary objection centers on the proposed 13.1¢ rate, which merely preserves existing levels with minor Consumer Price Index adjustments. In contrast, objectors are demanding a statutory mechanical rate of 15.65¢ per track, arguing that the current proposal fails to reflect the true value of musical works in the streaming era.

Key grievances include:

Rate Stagnation: The freeze ignores market growth, leaving creators with significantly lower earnings than the requested 15.65¢ benchmark.
Procedural Exclusions: Prominent entities like Global Music Rights were excluded from negotiations, while George Johnson reported never receiving the proposal for review.
Lack of Transparency: The exclusion of independent voices undermines the legitimacy of the settlement process.

For creators, this standoff highlights the critical importance of collective bargaining. When major labels and publishers align, independent songwriters risk being sidelined unless they organize to demand fairer statutory rates.

Exclusions and Procedural Errors

The settlement filing faces serious procedural challenges that could undermine its legitimacy. George Johnson, a prominent objector, explicitly stated that the proposal was never sent to him for review or denial. This omission raises questions about the transparency of the process and whether all affected parties were given a fair opportunity to assess the terms before they were presented to the Copyright Royalty Board.

Furthermore, Global Music Rights (GMR) was excluded from the settlement process entirely, leading them to withdraw from the proceedings. This exclusion highlights a critical gap in how rights holders are being represented. For creators, these procedural errors are not just bureaucratic details; they signal a potential lack of due process that could allow the CRB to reject the deal. If the board finds the negotiation process flawed, the proposed rate freeze for 2028–2032 may be overturned, leaving songwriters without the stability they sought.

Key procedural failures include:

George Johnson’s exclusion: The proposal was never sent to him for review or denial, violating standard notification protocols.
GMR’s removal: Global Music Rights was excluded from the settlement process, prompting their withdrawal and casting doubt on the agreement’s completeness.
Lack of consensus: Major objectors like the Songwriters Guild of America and Word Collections filed formal objections, indicating a fractured industry stance.

These oversights suggest the deal may not withstand legal scrutiny, potentially forcing a renegotiation that could benefit independent creators seeking fairer mechanical rates.

Precedent: Why the CRB May Reject This Deal

The Copyright Royalty Board (CRB) has a history of scrutinizing deals that favor industry giants over individual creators. In 2022, the CRB rejected a similar rate freeze, citing serious concerns over vertical integration between major labels and publishers. This precedent suggests the Board is wary of agreements that consolidate power and suppress royalty growth, potentially viewing the current Phonorecords V proposal through that same critical lens.

If the CRB follows its prior logic, it may view the exclusion of key voices as a procedural flaw that undermines the settlement’s fairness. Objectors argue the deal ignores the need for a statutory rate of 15.65 cents, preferring a stagnant 13.1 cent baseline. Key concerns include:

Vertical Integration Risks: The CRB previously blocked deals where labels and publishers had conflicting interests.
Exclusion of Independent Voices: Groups like Global Music Rights were left out, weakening the proposal’s legitimacy.
Stifled Creator Growth: Freezing rates ignores inflation, effectively cutting songwriter pay in real terms.

This historical context gives independent creators hope that the Board might reject a deal that prioritizes corporate stability over fair compensation.

What This Means for Independent Creators

This dispute is far more than a bureaucratic row over cents; it establishes the financial baseline for mechanical licensing through 2032. By attempting to freeze rates at the existing 13.1 cents per work, the settlement proposal effectively ignores the growing value of streaming and digital consumption. For independent creators, this represents a critical moment where intellectual property rights could be locked into undervalued distribution models, stripping artists of fair compensation for their work.

The backlash highlights how procedural exclusions can silence voices. When entities like Global Music Rights were excluded or individuals like George Johnson were never sent documents for review, the integrity of the rate-setting process was compromised. This lack of transparency threatens the ability of smaller rights holders to advocate for themselves in a system dominated by major labels and tech giants.

Key implications for your bottom line include:

Rate Stagnation: Accepting the freeze means missing out on the 15.65 cents statutory rate demanded by objectors, directly impacting long-term royalty income.
IP Protection: The fight ensures that mechanical licenses reflect actual market value rather than legacy physical sales metrics.
Collective Power: The involvement of groups like the Songwriters Guild of America demonstrates that unified objections can challenge even powerful industry coalitions.

If the Copyright Royalty Board rejects this deal, it could set a precedent that prioritizes creator value over corporate convenience, ensuring future contracts better protect your rights.

How Creators Can Leverage Collective Action

For independent creators, this dispute highlights the power of collective bargaining through established guilds. When major entities like the Songwriters Guild of America and Word Collections file formal objections, they amplify individual voices that might otherwise be ignored by the Copyright Royalty Board (CRB). This isn't just about abstract rates; it’s about ensuring your contract reflects a fair share of the mechanical license revenue generated by your work.

To leverage this momentum, creators should:

Verify Guild Representation: Ensure your publishing deal or administration agreement aligns with guild standards, allowing you to benefit from their legal challenges.
Monitor CRB Filings: Track public comments and objections filed by supporting parties like Apple and Spotify, as these influence the board’s final rate determination.
Demand Transparency: If you are excluded from settlement negotiations, as George Johnson and Global Music Rights reportedly were, use this as leverage to renegotiate terms with your label or administrator.

By staying informed and united, creators can push back against rate freezes that stifle growth, advocating for the 15.65¢ statutory rate that many argue is the only fair compensation for the digital age.

FAQ

Why are songwriters rejecting the Phonorecords V settlement proposal?

Objectors like the Songwriters Guild of America argue the deal is 'unreasonable' because it freezes mechanical rates at current levels rather than increasing them. They are demanding a statutory rate of 15.65 cents per track, significantly higher than the existing 13.1 cents preserved by the agreement.

What specific rates does the Phonorecords V settlement propose for 2028-2032?

The proposal maintains the current rate of 13.1 cents per work or 2.52 cents per minute, whichever is larger, for physical formats, ringtones, and permanent downloads. Instead of a substantial increase, the agreement only allows for annual adjustments based on the Consumer Price Index.

Who filed objections to the Phonorecords V deal and who supports it?

The Songwriters Guild of America, Word Collections, Eight Mile Style, and George Johnson formally objected to the settlement. Conversely, major streaming platforms including Apple, Spotify, Pandora, Google, and Amazon are listed as supporting participants in the filing.