Billboard: Music’s Wealth May Shift From Labels to Publishers with MMA Passage

The newly passed Music Modernization Act (MMA) is expected to increase the overall revenue for publishers and songwriters; however, this article from Billboard suggests that the publishing sector may accrue new earnings at the expense of record labels. The three largest publishers by revenue — Sony/ATV, Universal Music Publishing Group and Warner/Chappell Music — are each owned by the three largest record companies. The additional revenue earned by the publishing arms may hurt the record companies because the profit margin on additional label revenue is higher than that of extra publishing revenue, mostly because of the higher royalty rates paid by publishers to songwriters. Apple Music has already negotiated lower revenue shares for labels in order to offset the unknown increases expected for publishers. A provision in the MMA allows federal judges who determine publishing rates for programmed music to look at how much record labels are being paid by digital services, which was not previously considered when determining their formula. The article does note that the Classics Act component of the MMA could financially benefit record companies.  

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