The streaming music industry's current mechanical licensing system creates inequitable outcomes for songwriters. Here's a detailed analysis of potential solutions to fix this broken system.

The Current Problem

Songwriters are suffering under the current streaming licensing scheme, where mechanical royalties are taking significant hits. While major publishers controlling 70% of revenue-earning songs remain protected through label relationships, individual songwriters bear the brunt of diminishing returns.

The streaming revenue pot's distribution remains fixed, with song rights capped at 20% regardless of subscriber rate increases. This structural limitation makes current proposed solutions like direct licensing of mechanicals ineffective.

Two Proposed Solutions

1. Eliminate Streaming Mechanical Royalties

• Reclassify streaming rights as solely "public performance" rights
• Have PROs (ASCAP, BMI, etc.) handle all negotiations and distributions
• Enable direct payment flow to songwriters
• Remove publisher ability to recoup advances from mechanical income

2. Unified Rights Arbitration

• Create single negotiation process for all stakeholders
• Adopt app store revenue model (platform fee + content split)
• Employ arbiter panel to conduct hearings and allocate shares
• Have PROs represent songwriter interests

Benefits of Reform

• Streamlined licensing process
• More direct compensation to songwriters
• Reduced administrative complexity
• Better negotiating leverage for creators

The Role of PROs

ASCAP and BMI are well-positioned to lead this reform as they:

• Have explicit charters to protect songwriters
• Possess negotiation expertise
• Maintain efficient payment systems
• Can serve as independent advocates

While publishers may resist these changes due to reduced control over mechanical royalties, reform is necessary to create a more equitable streaming ecosystem that better serves songwriters' interests.

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