NMPA CEO David Israelite Discusses The Latest With Songwriter & Publisher Royalties: Music Streaming, TikTok, YouTube and AI

As the President & CEO of the National Music Publishers Association (NMPA), David Israelite has played a vital role in advocating for the rights of songwriters and music publishers, particularly from a business, legal and financial point of view. He and his team at the NMPA have fought hard to secure the best royalty rates for songwriters & publishers, whether it be from digital music streaming, performance rights income, film & TV sync licensing, and other sources of income.

We are pleased to do a new Q&A interview with Israelite. He discusses the latest issues and challenges facing songwriters & publishers, and how they can continue to maximize their income in this new digital era.

Israelite discusses a new problem that has emerged, regarding getting paid fully by Spotify. He also talks about the income that songwriters earn from both U.S. and international royalties. In addition, he discusses the relationship between the music industry and TikTok, and with YouTube. And lastly, he tells how AI (artifical intelligence) is affecting songwriters and the music industry.

Before we start this interview, here is some information on the NMPA and Israelite. Founded in 1917, the NMPA (which is based in Washington, DC) is the trade association representing all music publishers and their songwriting partners. The NMPA’s mandate is to protect and advance the interests of music publishers and songwriters in matters relating to the domestic and global protection of music copyrights. Before joining the NMPA in 2005, Israelite, who is an attorney, served as Deputy Chief of Staff and Counselor to the Attorney General of the United States, and he was also Chairman of the DOJ’s Task Force on Intellectual Property.

Israelite is responsible for overseeing all aspects of NMPA’s operations, from legal strategy and implementation to government affairs and advocacy. His leadership has produced important successes on behalf of publishers including the largest Copyright Royalty Board (CRB) rate increase in history, industry collaboration in royalty rate agreements, settlements and model licenses with streaming platforms, and raising the profile of the publishing community. Additionally, he was instrumental in guiding the effort to modernize copyright laws culminating in the Music Modernization Act (MMA) and the subsequent creation of the Mechanical Licensing Collective (MLC).

Here is our new interview with David Israelite:

DK: Currently, what are some of the biggest developments that relate to royalties for songwriters & music publishers?

David Israelite: I think the most important development has been how streaming services pay songwriters. The most important income stream for a songwriter is through music subscription services like Spotify or Apple or Amazon or YouTube.

That is the largest source of revenue by far, and it’s also the one that when you look to the future, seems to be the most important revenue source. And those services are changing quite a bit in terms of what they are offering to their customers and how they pay songwriters. For example, many of these services are now trying to bundle their music service with some other type of product that they’re selling, like a book subscription service or offer more video options instead of just being an audio music service. And as these services are changing their offerings, it changes how they pay songwriters. I would say that probably the number one issue for songwriters today is making sure that we’re getting paid appropriately from these services that are trying to diversify their offerings to their customers, even though they’re using music as the main selling source as to why someone should buy a subscription.

DK: What are some of the problems you’ve recently encountered that indicated that songwriters & publishers aren’t getting paid what they should because of the bundling?

Israelite: So the way that these services pay songwriters is regulated by law, which is a very weird dynamic of the music industry. It’s been the case for a very long time that the government sets the pricing of what these services pay songwriters. There is a very strange provision in the law, that dictates how they pay us when they bundle a music service with a non-music service. And what we’ve encountered in the case of Spotify, which is the largest music streaming service in the United States and the world, is they started offering a book product with their music product, and they did not give their consumers any choice about having to take this new bundled product. And because of that, the way that the law works in Spotify’s view is they get to divert some of the money that a customer pays away from music. So when the law says that a songwriter is supposed to get a percentage of the revenue pool, Spotify argues that their revenue pool is shrunk when some of the revenue doesn’t go for music. So that is a conflict now that we’re having—there’s a lawsuit that’s pending. There’s a complaint in front of the Federal Trade Commission that’s pending. But it’s having the impact of cutting hundreds of millions of dollars from what Spotify pays songwriters. So right now, that’s the number one conflict we’re having and something that’s impacting songwriters in a very negative way.

DK: So is the NMPA & songwriters currently suing Spotify for this reason?

Israelite: Yes, the collection agency that under the law licenses and collects this money is called the Mechanical Licensing Collective, or The MLC. They’re officially the ones who filed the lawsuit, but it’s on behalf of all the songwriters and music publishers.

DK: Regarding mechanical royalties, what the current mechanical royalty rate, and do songwriters & publishers still get about 15% of the overall revenue from streaming?

Israelite: The current rate structure is very complicated. But in simple terms, we get the benefit of three different formulas and we get whichever one is the highest.

Now because of the way that the law works, the first will be called the prong of a three-prong test is a percentage of revenue, and that right now is 15.3% of the revenue. But as we discussed, if the revenue is being defined as something less than the full subscription price, then that obviously impacts how much we get paid under that formula. There’s a second and third prong that have to do with we’re guaranteed a certain percentage of what record labels get paid because they negotiate their deals in a free market, or we get a minimum number per subscriber. But that second and third prong are meant to be kind of insurance, protections against falling too low. We’re supposed to get paid under the first prong, which is this percentage of revenue test. It should be 15.3%. For example, if Spotify is charging a customer $12 for a music subscription, we should be getting 15% of that $12. But what Spotify is trying to do right now is claim that somewhere around $5 of the $12 is going to books regardless of whether a customer wanted the book product or is using the book product. And that’s what our dispute is all about. But the rate structure has been the same, basically, for 20 years since the streaming services started mattering, and a percentage of revenue is normally how we get paid.

DK: Here’s a more general question, about how much a songwriter can earn if they write a hit song. Let’s say a songwriter writes a song that becomes a Top 10 hit on the Billboard Hot 100 chart. And let’s say they wrote the song by themselves and they kept their publishing rights. About how much money can this songwriter earn from that song if it’s a Top 10 pop Billboard hit?

Israelite: It’s a great question, and I know a lot of your readers are often interested in this kind of hypothetical. And we should recognize and I know you do, how rare it would be for a Top 10 hit to be written by only one songwriter that has kept all of their publishing. But the question is good, because it gives you at least a sense of the total economics. And then if you know that the writer’s credit is being split, you can do the math.

There’s no direct answer to that question because it depends on so many factors that you don’t know the answer to. For example, you have to know how many times it was streamed to even know in a given month how much money you would make from the streaming services. In some months, a Top 10 song will be streamed significantly more than in other months, so that makes a big difference. You have to know how much it’s played on the radio. You have to know whether or not that song is being used in a synchronization for a movie or a TV show, or whether it goes viral on a social media site. There are so many different ways that songwriters get paid, that it’s very difficult to answer those stock questions about what would a Top 10 song make. So I’m reluctant to even ballpark a number because of all those different factors of what you really don’t know. Although one of the things that we do, is that we regularly put out a chart that shows you for every million streams, how much you can expect to earn from the streaming services for example. And there are some other places online where you can go and you can plug that in.

A lot of people get confused, because they don’t make the difference that you asked in your question about, between the artist and the songwriter. So oftentimes you’ll see people discussing, “I made this much money from my song.” But you’ve got to know whether or not they’re talking about it as an artist, as a producer, as a songwriter, what percent they own…all the things that your question assumes. So what I would say is that a Top 10 song today—as a songwriter if you own a 100% of it, yes you are going to make a significant amount of money in that one year where it’s a Top 10 song. But most of those examples are split many ways, because most of the Top 10 songs today have an average of between five and six songwriters on the song, and those songwriters generally have publishing deals where some percent of their share goes to their publisher. So any number that you come up with in the real world is probably being split. You’re getting maybe one-sixth to one-tenth of that number as a key writer on that song.

DK: You said something that’s very interesting and important, that many of the current chart hits have an average of five or six songwriters on the writing credit. And you also have to divvy up the publishing. So if you’re a young songwriter and you want to make a living as a songwriter, the reality is that you’re probably going to write and earn just 20% of the income for a hit song. So it shows how hard it is to make a living, when even if you write a hit, you might only receive 20% of the income.

Israelite: It’s very difficult today to be a songwriter, and it’s one of the things that I think the industry is focused on, is how different it is to be a songwriter today than it was 20 years ago. When consumers used to buy full albums, whether it was in the format of a CD or a vinyl album, every songwriter on that album basically got paid the same, regardless of whether it was one of the hit songs from the album or not. Because when you purchased an album, the money was divided by song equally. And today in our streaming economy, it’s all about the hits. It’s not about getting cuts on albums. So for many middle-class songwriters who could make a living by writing good songs that got on good albums, that’s no longer the case. You have to be writing the songs that become the hits and that get streamed as singles.

You also are having to do a lot more to get the same. And so you hear from songwriters that talk about how much harder they have to work, how many more songs they have to write and get cut to get the same economics that they used to get before. That’s something that’s really concerning, because the middle-class of songwriters are being squeezed quite a bit by the economics of how the system works today. And unlike artists, songwriters don’t have the opportunity to go on tour and sell concert tickets or merchandise the same way that an artist does. So for many artists, they’ve leaned very heavily on their touring to supplement their income. But for songwriters, they don’t have that choice. So you see a lot more songwriters trying to write for films and TV or commercials, because it’s a necessary supplement to what they used to be able to make by just writing good songs for artists.

DK: Do you think it’s a little easier if you’re a country songwriter, because many country hits are written by just three writers, and you still have country radio airplay that continues to be a good income source. So is it a little easier for a good country songwriter to have success and make a living?

Israelite: It’s a really good question. There are a lot of things that are different about being a country writer than other types of songwriters. First, it is generally the case that if you are a country songwriter, that whenever you write a song in a group, that you just share the song equally regardless of any individual contribution to that one song. It’s kind of a culture that the assumption is that over time that works out and is fair to everybody. In other forms of songwriting, there oftentimes are disputes about how you split up the pie and who should get what percent. You are correct that country writing tends to have fewer writers. Part of that is how the songs are written. In some other genres, there’s a lot more interaction with producers and beat makers and sampling and things like that, which splits up the money in multiple different ways. Whereas country songwriting is still generally done in a small group…sometimes with an artist, sometimes not. And radio plays a more important role for country music than it does for other genres right now, and so those economics feed into it. I still think that country writers are having a very difficult time with making a living, as other songwriters are, but you are correct that there are different dynamics about being a country songwriter that sometimes can make it better for the country writer.

DK: In recent years, I’ve noticed that many new songs seem to be about two to three minutes long, whereas in the past most songs used to be three to four minutes long. Is this because these days, artists get paid by how many times their song is streamed, so they want to keep songs shorter so listeners can quickly move on and click their next song?

Israelite: It’s a wonderful observation and you’re correct. You’re finding that the average length of songs has been shortened. It’s hard for me to say whether or not songwriters and artists are shortening songs because of the way that streaming pays, which is by the stream. So you’re correct—if your song is 35 seconds and it’s streamed by a customer, you’re gonna make the same as if it were a 3-minute song streamed by the customer. I’ve never heard any creative person say that’s why they’ve shortened the format of their songs. I do think that there is definitely a mind towards songs going viral on social media, and that shorter songs tend to be more conducive to potentially going viral. So I think that’s part of what goes into play. But I’m not a musicologist, and it’s probably a better question for someone who’s on the creative side, than someone like me who’s on like the policy and business side. Because I wonder the same thing, and whether or not it’s just a trend in music today, or whether it’s something that might be geared towards about how the industry works.

DK: Regarding TikTok, I know that many young artists like the exposure they’ve gotten from posting their videos and songs on TikTok. I’ve talked to many artists who’ve gotten a record deal and had a hit, who say they got their big break when they posted a song a TikTok and it went viral. But can songwriters & publishers earn significant royalties from being played on TikTok?

Israelite: What I would say about TikTok is, first of all, they do license their music. So that is something that’s very important, that this is a platform that gets permissions from the copyright owners for them to do what they do. So that is obviously a much better situation than some other platforms that attempt to use music but not license it. That being said, I think the general feeling in the music industry is that music is significantly more valuable to a platform like TikTok than the amount of compensation that they pay for the right to do it. And a lot of that is because they have quite a bit of leverage, in that so many fans are on TikTok and the artists want to be on TikTok. So it’s very difficult, I would imagine, for individual record labels or music publishers to negotiate fair rates when there’s a lot of pressure from their own artists to give in and be on the platform. And I think we saw that play out when Universal had its dispute with TikTok.

I do know that TikTok is being used as kind of a replacement for a lot of what had been traditionally other types of A&R testing. So for a lot of artists, this is how you get a record label deal, or this is how you get people interested enough to then go to a different platform and stream your song, which might have better economics toward it. But it’s undeniable that it’s a place where there’s a lot of music discovery going on, and it’s a place where a lot of fans reside. And I think one of the biggest challenges for the music industry is this idea that we’re so desperate for exposure and for clicks and views, that are we getting proper economics for the benefits of the platform of having this on? These companies are making an enormous amount of money, either through their valuation and their stock price or whether through just what they’re earning in revenue from advertisements or subscribers. My general view is that music is significantly more valuable than it’s being compensated for. And that’s something that’s not going to change unless a lot of the creatives also join in taking the stand that they don’t want their music on these platforms unless the economics improve.

DK: How do the royalties from TikTok compare to the royalties from YouTube?

Israelite: They’re different models. YouTube does have a subscription service, and YouTube also has other forms of content other than just short-form videos. So you do have a YouTube Shorts for example, that is similar to a TikTok, but then you have other things that are longer form on YouTube. So it’s difficult to compare the business models in that regard. But I would say that both TikTok and YouTube are two of the platforms where from a songwriter perspective, there is not adequate compensation in terms of the value that’s being provided by the songwriters. It’s on the low end of the spectrum.

DK: I want to ask you about international royalties. When a songwriter has a Top 10 pop Billboard hit, how much of their royalties come from the U.S., and how much of the royalties come from other countries?

Israelite: My experience is that the U.S. is about 50% or more of the total revenue, and so it’s generally about half of the worldwide revenue. But again, it depends so much on the genre, and whether it catches on in other countries and things like that.

DK: So if a songwriter makes X amount from U.S. royalties, that they might make twice that when you include the international royalties?

Israelite: Yes, that’s a reasonable starting assumption. It’s somewhere in that range.

DK: These days, everybody is talking about AI, and it’s potential impact in the music business. How has AI affected songwriters and the music industry?

Israelite: I think that questions about AI are probably the most dominant topic that people want to talk about, and for good reason. It’s an existential threat of what’s happening in the music industry with regard to AI. There are of course, lots of AI issues broader than just the music industry itself. It’s really an all-encompassing question. We generally look at these questions, divided into different buckets of questions. You know, you have one bucket that is a legal-focused question. Can these AI sites train on copyrighted music without your permission? And we don’t know the answer to that yet. There are a bunch of lawsuits that are pending. It will take a very long time for them to play out. We don’t yet have a definitive answer whether or not these models that have trained on all the music in the world without permission or compensation, were allowed to do that or not. So I think it’s going to be a very long time before we have some clarity from the courts about the state of the current law.

The second bucket has to do more with policy questions and the government. Is the government going to do anything, regardless of what the current law says about these developments? And on that front, we’re not very optimistic that we’re going to have the government helping the music industry on AI questions. I think that governments—not just the United States government, but governments around the world—they view AI development as almost like an arms race against other countries. They think it has economic security and national security implications, and they don’t want anything to slow down the development of their AI companies. So copyright is seen as kind of a speed bump in that race. There are some things that we’re hoping the government will be sympathetic to with regard to transparency and how the models are trained, or record-keeping about what they use to train. So if the lawsuits are successful, we can go back and unwind what’s happened. But I don’t think you’re going to see the government step in and change the rules to our benefit on how fair use works or things like that.

The third bucket is probably the most relevant one today, which is how is this going to develop in the business marketplace? You have a lot of companies that are using AI and music, and they’re starting to talk about trying to license with music companies instead of fight them in court. You’ve seen headlines about some of the music companies doing some licensing deals whether it’s ElevenLabs with a Kobalt, or Udio with a Universal or Sony, or Suno with a Warner. And I think that’s where we should be paying the most attention, is to whether or not these AI companies decide to become business partners with permission, or whether they want to take the road of just trying to get away with what they think they can get away with. That’s where we’re spending a lot of our focus is, how does that develop in the marketplace, and as it develops, all kinds of questions come up. Are you licensing the training of the model, or are you licensing the output from the model, or those two separate questions? Whether or not what’s created in an AI system stays within the walled gardens as they call it, or whether it’s free to go out into the marketplace and compete against other music.

There’s a lot of big questions that the music industry is going to have to work through, But the one thing that I think we should all accept, is that AI has already fundamentally changed how music is created, and that’s not going back. And whether it’s being used as a tool, where songwriters and artists have always used tools in their music creation over history. Or whether is it going to be used for more nefarious purposes to flood the systems with songs that had no human involvement and try to divert royalties to the humans that make music to someone else. Those are big questions. But you can be sure that everyone in the music industry is very focused on this, and it’s something that will change the industry. Overall, I’m optimistic. I think that the potential upside from all of these AI applications outweighs some of the dangers, but I also think the dangers are very real.