Why songwriters are paid months after a stream, and who sets the rate
A federal board sets US streaming and download rates, a licensing collective collects the money, and songwriters are paid months after each stream. Here is how the chain works.
On-demand streaming services in the United States pay mechanical royalties to songwriters and publishers. The amount is not set by the streaming service alone. A federal board sets the rates, a licensing collective collects the money from services, and payments reach songwriters and publishers months after the listening took place.
This explainer covers mechanical royalties on musical works, the compositions behind recordings. It sets out who sets the rates, how money moves through the system, what applies in 2026, and what is still being negotiated for 2028 to 2032.
The Copyright Royalty Board sets the rates
The Copyright Royalty Board (CRB) sets the terms of the section 115 statutory license for nondramatic musical works. Under that license, the board sets the statutory rate.
Rates are set in proceedings that cover fixed periods. The current cycle, Phonorecords IV, set a headline rate rising to 15.35% of a service's US revenue by 2027, according to Music Business Worldwide (MBW). The next cycle, Phonorecords V, covers January 1, 2028 through December 31, 2032. The CRB's July 10, 2026 news bulletin confirmed that period and opened comment on a partial settlement.
How the MLC collects and pays streaming royalties
For digital services, the Mechanical Licensing Collective (the MLC) administers a blanket license. Eligible digital services that opt in must report usage and pay every month. They can submit within 15 days after the month ends and receive an invoice from the MLC. Alternatively, they can calculate what they owe themselves and submit payment and usage reports by the 45th day after the usage period closes.
The MLC matches the reported royalties to works and to members, then distributes them monthly, about 75 days after each monthly period ends. January usage, for example, is paid in mid to late April. Members receive statements either by sound recording or by musical work, in tab-separated files.
Payments can change after they are made. The MLC lists member disputes, member errors, service corrections to earlier reports and changes to statutory rates as reasons for retroactive adjustments. Its example is the Phono III rates, finalized in August 2023. Services had until February 9, 2024 to submit revised data, and matched historical royalties began paying in April 2024, with interest.
The 2026 physical rate and the 2028 streaming dispute
For physical and download uses, the 2026 statutory rate is 13.1 cents per track or 2.52 cents per minute of playing time, whichever is larger. A proposed settlement filed June 29 by Sony Music Entertainment, UMG Recordings and Warner Music Group, along with A2IM, the NMPA, NSAI and the Music Artists Coalition, would keep that structure through 2032. The only change would be annual inflation adjustments tied to the Consumer Price Index. Comments were due August 10.
Songwriters Guild of America, Word Collections and songwriter George Johnson did not sign that settlement. If any of them filed an objection by the August 10 deadline, the judges can decline to adopt it if they find it does not offer a reasonable basis for the rates.
Streaming rates remain unsettled. Parties to Phonorecords V filed written testimony and rate proposals on October 5, 2026. Spotify, Apple, Amazon, Google and Pandora are participants in the proceeding. The three major record companies file jointly as the Joint Record Company Participants.
According to MBW, which relays reporting from Digital Music News, several writers and publishers back a flat $0.0030 per interactive stream or limited download in 2028, adjusted for inflation each later year. The streaming services' trade group, DIMA, said in its October 6 statement that it looked forward to a "timely resolution." A hearing is scheduled to begin March 22, 2027 unless the parties settle. The CRB's initial determination is due December 17, 2027.
“Some royalties sit unclaimed for years before they can be distributed to anyone.”
Unmatched royalties and the April 2027 payout
Not every royalty can be matched to a work and a member when it arrives. The MLC has paid more than $4.2 billion to songwriters and publishers since January 2021, a figure it confirmed at its annual membership meeting on September 29, 2026, according to MBW. Some royalties sit unclaimed for years before they can be distributed to anyone.
The Music Modernization Act requires the MLC to eventually distribute remaining unmatched royalties through an "equitable market share" process. The first such distribution is planned for April 2027 and will cover January 2021 usage, the first month digital services reported under the blanket license. The MLC says just over $6 million remained for that month after its September 2026 distribution, down from under $7 million in January 2026.
The allocation will be pro rata by service and offering, based on reported usage data and the MLC's own distribution data rather than estimates of market share. Only one usage month is paid per distribution. Unclaimed accrued royalties must be held for at least three years. By the time of the April 2027 payment, the MLC will have spent more than six years trying to match and distribute January 2021 usage.
Publishers and administrators that receive these funds must pay or credit at least 50% of the songwriter's attributable amount to that songwriter, regardless of contract terms. Historical unmatched royalties for 2007 to 2020 are not part of the April 2027 start. MBW calculated that about $158.6 million remained undistributed in that category, and the MLC will announce timing for it later.
Publishing revenue and the disputes that could move totals
The NMPA reports that US publishing revenues rose from $5.6 billion in 2022 to $7.3 billion in 2025, growth of more than 30%. It also reports roughly 3.7% year-over-year growth for 2025. MBW reports these figures in its coverage of the Phonorecords V filings, and the streaming trade group DIMA cites the same $5.6 billion and $7.3 billion figures.
A separate dispute involves Spotify's March 2024 bundling of Premium with 15 hours of audiobooks. The NMPA projects the bundle could cost publishers more than $3.1 billion through 2032 if it is not reversed. According to MBW, the MLC sued Spotify over the bundle in May 2024; the case was reopened in September 2025, and the MLC filed an amended complaint the following month.
In practice, the sequence runs in order. The CRB sets the rate for a multi-year period, services report and pay the MLC each month, the MLC pays members about 75 days after each month, and later adjustments can change amounts already distributed.
