The first of ten questions the US Copyright Royalty Judges put to the Phonorecords V settlement is short. “Does the settlement include a mechanical base rate of 12 cents?” the judges asked in an order this month, according to Digital Music News. “If so, why is it reasonable for the mechanical floor rate to not track increases in the CPI-U?”
That question sits at the centre of a proceeding that will set what songwriters and publishers are paid when a song is sold on vinyl, CD or as a download in the United States from 2028 to 2032. The major labels and the main publisher and songwriter groups have agreed a deal. A smaller group of songwriters, publishers and activists says the deal takes the rate backwards, and the judges now want answers.
What the Phonorecords V Settlement Would Do
Every five years, the Copyright Royalty Judges set the rates for the mechanical licence under Section 115 of the Copyright Act. That licence lets anyone make and distribute recordings of a song that has already been released on record, as long as they follow the rules and pay the statutory rate. The current proceeding, docket 25-CRB-0013-PR, began in December 2025, according to the judges’ notice in the Federal Register.
On 29 June, a group of participants filed a motion asking the judges to approve a partial settlement. It covers what the regulations call Subpart B: physical records, permanent downloads, ringtones and music bundles. It does not cover streaming, which is decided separately in the same proceeding.
The deal itself is short. The settling parties asked for the existing rates and terms to stay in place for 2028 to 2032, unchanged except for the annual inflation adjustments to the rates for physical records and downloads. For 2026, that rate is 13.1 cents per song, or 2.52 cents per minute of playing time, whichever is larger, Digital Music News reported.
Where the 12-Cent Figure Comes From
The dispute is about what “unchanged” means. The rate that came out of the last proceeding, Phonorecords IV, started at 12 cents and has risen with inflation since. In their joint objection, the Songwriters Guild of America and Word Collections argued that the settlement would revert to that 12-cent starting point in 2028, apart from cost-of-living adjustments, rather than carrying on from the 13.1 cents paid in 2026, or the higher rate expected after the 2027 adjustment, Digital Music News reported in August.
The settlement’s supporters read it differently. In its filing to the judges, the Music Publishers Association of the United States said that under the proposal the current 13.1-cent rate for physical copies would be adjusted for inflation for 2027, the last year of Phonorecords IV, and then again every year from 2028 to 2032.
The judges did not pick a side. They asked. Beyond the 12-cent question, they wanted to know whether the cost-of-living formula accounts for the high inflation of 2021 and 2022, what the base rate would be if it did, and why it would be economically accurate to leave those increases out of the Phonorecords V rates.
Who Signed the Deal and Who Objected
The motion came from two blocs. On one side, the National Music Publishers’ Association, the Nashville Songwriters Association International and the Music Artists Coalition. On the other, Sony Music Entertainment, UMG Recordings and Warner Music Group, with the American Association of Independent Music, according to the Federal Register notice.
A2IM’s place in that list is a turn. At the last proceeding, the independent labels’ body vocally opposed both the settlement the judges rejected and the one they eventually approved, Digital Music News noted when the deal was first reported in July.
Four copyright owners in the proceeding did not sign: the Songwriters Guild of America, Word Collections, Eminem’s publisher Eight Mile Style and the songwriter and activist George Johnson. The Guild and Word Collections dispute the idea that they declined to join, saying they had “extremely limited” contact with the settling parties before the proposal was filed. Johnson told Digital Music News in July that the objectors would seek a Phonorecords V rate of 15.65 cents.
The objections went further than the number. Johnson’s filing, close to 50 pages long, called the proposed rate “still way below-market”. Eight Mile Style called the settlement “effectively a rate freeze, unmoored from economic reality and for which no valid justification exists.” Its filing also argued that the major labels and their publishing affiliates sit on both sides of the table, so that the willing buyers and willing sellers are the same companies at the corporate level.
The Case for Leaving the Rates Alone
The deal has support well beyond the signatories. Songwriters of North America called it “a reasonable and practical resolution that preserves the important progress achieved during the Phonorecords IV proceeding.” The Recording Academy praised the stability and predictability it offers, and the Association of Independent Music Publishers described it as “a step in the right direction”, according to Digital Music News.
The Music Publishers Association made the economic case in its own filing. Physical formats are a smaller share of the market than they were, it said, but the vinyl resurgence shows that listeners still value them, and the rates have to keep pace with inflation for the songwriters whose work drives those sales. The settling parties also argued that the deal avoids costly and uncertain litigation.
That argument has a history, though. In 2022, the judges rejected a proposed freeze of physical and download rates, calling the vertical integration linking music publishers and record labels “a warning flag”, Digital Music News recalled. The same concern is back: several of this month’s ten questions ask about common or overlapping ownership between the settling labels and publishers.
Ten Questions From the Royalty Judges
Chief Copyright Royalty Judge Trevor Jefferson issued the order after the comment period closed on 10 August. It says one or more of the judges needed more information, mainly because of three substantive objections: the Society of Composers and Lyricists’ concerns about a conflict of interest between the settling parties, the Guild and Word Collections’ arguments about the rate reset and inflation data, and Eight Mile Style’s criticism of the frozen ringtone rate.
The settling parties have until 2 October to answer those objections and to give specific answers to the ten questions. Where ownership overlaps, the order asks them to describe the relationship in enough detail to show the settlement was an arm’s-length transaction. It also asks whether they will voluntarily hand over documents, including negotiation documents and emails, that would show a real negotiation between willing sellers and willing buyers.
The last question turns to the objectors themselves, and to whether they took part in the settlement talks at all.
What Happens After 2 October
This is still a proposal, not a rule. Under the Copyright Act, the judges can adopt a negotiated settlement as the statutory rate for everyone. But if a participant objects and the judges conclude the agreement does not provide a reasonable basis for setting rates, they can decline to adopt it for participants who did not sign, the Federal Register notice explains.
The wider proceeding keeps moving at the same time. Participants who could not settle were told to file written direct statements by 5 October. For anyone selling their own music on vinyl or as downloads in the US, the short explainer from Velveteen is a useful map of which sales this part of the case touches and which it does not.
PopHits.co’s curator team:
For an independent artist, a cent on a vinyl sale feels abstract until you multiply it by a pressing run. If your own songs are on the records at your merch table, find out this month who collects the publishing side of each sale, because whichever reading of this deal wins, that money only reaches you if someone is claiming it.
Mechanical royalties are one income stream among several, and artists with four income streams earn up to four times more, as we reported this month. The judges’ next move on Phonorecords V comes after the 2 October answers.
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