The numbers are in. Because of the inflation adjustment that labels and songwriters negotiated for the Phonorecords IV fee interval to defeat the frozen mechanical, the statutory mechanical royalty fee for bodily phonorecords and everlasting downloads will enhance to 13.6 cents per track in 2027, based mostly on my calculation utilizing the Shopper Worth Index launched this morning by the Bureau of Labor Statistics.
That’s up from 13.1 cents in 2026 and represents the ultimate annual cost-of-living adjustment below the present Phonorecords IV fee interval, which runs from 2023 by means of 2027. The choice per-minute fee will enhance from 2.52 cents to 2.62 cents per minute or fraction thereof, whichever calculation produces the better royalty. These are calculated charges below the relevant regulation. The Copyright Royalty Judges should nonetheless publish their official 2027 adjustment within the Federal Register however I really feel fairly assured that they’ll announce a 13.6 fee as we beforehand estimated based mostly on inflation traits.
This morning, the Bureau of Labor Statistics introduced that the Shopper Worth Index for All City Shoppers (CPI-U) elevated 0.4% in October on a seasonally adjusted foundation. However the quantity that’s most related for mechanical royalties isn’t the month-to-month inflation proportion. It’s the unadjusted CPI-U index, which BLS reported at 337.511 for October 2026. That quantity is the important ingredient in calculating the 2027 mechanical royalty fee below 37 CFR § 385.11.
The regulation established a base fee of 12 cents per track and a pair of.31 cents per minute for 2023, adjusted yearly in accordance with cumulative modifications within the CPI-U. The bottom index is 298.012, the October 2022 CPI-U revealed in November 2022.
Making use of the system:
12¢ × (337.511 ÷ 298.012) = 13.5905¢. Rounded to the closest tenth of a cent per the regulation, the 2027 per-song fee turns into 13.6¢.
2.31¢ × (337.511 ÷ 298.012) = 2.6162¢. Rounded to the closest hundredth of a cent, the per-minute fee turns into 2.62¢.
The cumulative enhance within the CPI-U between the bottom index and October 2026 is roughly 13.25%. The royalty formulation protect that cumulative inflation adjustment, topic to their prescribed rounding guidelines.
There’s a timing difficulty right here that deserves explicit consideration. Why does the October 2026 CPI-U decide the royalty fee for 2027, slightly than November or December inflation knowledge? The reply is discovered within the regulation itself. Part 385.11(a)(2) directs the Copyright Royalty Judges to calculate the annual adjustment utilizing the latest CPI-U revealed earlier than December 1 of the previous 12 months.
For the 2027 fee, meaning December 1, 2026, is the cutoff. The Bureau of Labor Statistics publishes inflation statistics after the month being measured has ended. Consequently, the October 2026 CPI-U, launched on November 10, is the ultimate month-to-month CPI-U accessible earlier than the CRB’s cutoff of December 1. (The following CPI report, masking November 2026, is scheduled for December 10. By then, the cutoff may have handed. Meaning the October CPI-U is successfully locked in because the controlling index for all the 2027 royalty 12 months.)
The timing is deliberate. The Copyright Royalty Judges should publish discover of the adjusted charges within the Federal Register at the very least 25 days earlier than January 1, giving copyright homeowners, file firms, and different licensees advance discover earlier than the brand new charges take impact. This additionally explains an necessary distinction within the calculation: the regulation measures cumulative inflation from the CPI-U revealed in November 2022 to the CPI-U revealed in November 2026. Due to BLS’s publication schedule, these are the October 2022 and October 2026 index values, respectively.
The royalty adjustment isn’t based mostly merely on inflation over the past month and even the final calendar 12 months.
| Fee | 2026 | Calculated 2027 |
| Per musical work | 13.1¢ | 13.6¢ |
| Per minute or fraction | 2.52¢ | 2.62¢ |
The relevant royalty for every musical work is whichever calculation produces the better quantity. For a ten-song album with songs brief sufficient for the per-work minimal to regulate, the minimal mechanical royalty will increase from $1.31 to $1.36 per album. That five-cent enhance could appear modest when thought-about one album at a time. However throughout substantial numbers of bodily data and everlasting downloads, and throughout a whole catalog, the cumulative impact is critical.
Extra importantly, the COLA adjustment is computerized. Songwriters shouldn’t have to return to the Copyright Royalty Board yearly to barter safety in opposition to inflation. That’s why the federal government has COLAs. They’re each honest and environment friendly.
The 2027 adjustment arrives because the trade prepares for the following mechanical royalty fee interval, Phonorecords V, masking 2028 by means of 2032. The expertise below Phonorecords IV illustrates an necessary precept: a statutory penny fee accompanied by a significant annual cost-of-living adjustment offers an goal, predictable measure of inflation safety for songwriters.
It offers songwriters and music publishers a clear fee that doesn’t rely on opaque royalty swimming pools, fluctuating service revenues, or accounting choices made by digital platforms. The penny-rate strategy additionally offers an independently ascertainable and predictable obligation for every licensed use. The royalty is set by the variety of musical works reproduced or distributed, not by the copyright proprietor’s share of a income pool managed by the licensee. As we famous within the Artist Rights Institute’s touch upon Music Streaming Fraud, the shortage of a penny fee and the shortage of a COLA each fail to create an financial incentive for companies to police their networks.
A CPI-U adjustment can not clear up each drawback with statutory mechanical royalty charges. It doesn’t robotically account for modifications within the worth of music or compensate for previous intervals when charges did not maintain tempo with inflation. However it does forestall an agreed statutory fee from steadily dropping buying energy just because the patron worth stage rises. That may be a substantial enchancment over a frozen penny fee. It’s unfair to ask songwriters and the Copyright Royalty Judges to need to anticipate what the price of “Meals at House” will probably be 5 years from now.
The lesson of the 2027 adjustment and Phonorecords IV is easy. The statutory mechanical fee for bodily data and everlasting downloads may have risen from 12 cents in 2023 to a calculated 13.6 cents in 2027, with out requiring songwriters to undertake a brand new fee continuing every year. (Thus additionally conferring on DSPs the substantial good thing about a locked-in, albeit unfair, fee for 5 years at a whack.)
The COLA mechanism is public, comprehensible, and independently verifiable. Anybody with the regulation and the related BLS figures can reproduce the calculation. That transparency is price preserving. Because the events strategy Phonorecords V, the target needs to be to construct on the profitable parts of the present construction: an applicable statutory penny fee, a significant inflation adjustment, and a royalty obligation that may be calculated with out counting on a service-controlled income pool.
The 2027 adjustment demonstrates that inflation safety works. The following problem is guaranteeing that the underlying penny fee adequately values the songwriter’s contribution within the first place.
