Back in summer of 2021, a small group of advocates took up what was considered at the time a niche cause to unfreeze the mechanical royalty rates set by the U.S. Copyright Royalty Board (CRB) that had been stagnant and update them for the current market climate. For more than fifteen years, those rates, governing payments for physical formats and permanent downloads, had remained unchanged under Phonorecords III. Meanwhile, the music economy had shifted dramatically. Vinyl had returned. Downloads hadn’t disappeared. Inflation had not been kind. And yet, the rate remained: 9.1 cents per track, unchanged for over all that time.
By May 2022, that effort eventually culminated in a proposed settlement submitted to the CRB which sought to raise the mechanical royalty rate for physical phonorecords and permanent downloads to 12 cents per track or 2.31 cents per minute of playing time, with annual inflation adjustments. After a summer of review and public comment, and a fall to ponder, the CRB issued its final rule in December 2022, officially adopting the new rates effective January 1, 2023, through the end of 2027.
Now, in August 2025, three years after the proposed settlement was under review and half way into the Phonorecords IV rate term—we have a good opportunity to assess the real-world financial impact of that change. With newly released Q1 2025 sales data from Luminate showing continued growth in vinyl and cassette formats. With the CRB actively engaged in other rate-setting proceedings, this moment offers a timely and meaningful checkpoint.
Under the Phonorecords IV determination by CRB mechanical royalty rates for physical phonorecords and permanent downloads were increased: the new rate structure sets royalties at 12 cents per track (or 2.31 cents per minute of playing time, whichever is greater) for 2023, and are subject to annual cost-of-living adjustments (COLA). This replaces the previously frozen rate under Phonorecords III, unchanged since 2006, of 9.1 cents per track.
To assess the financial impact of the updated mechanical royalty rates under Phonorecords IV, music sales data from the first quarter of 2025 was analyzed. Permanent downloads, while no longer dominant in the market, continue to generate mechanical royalties and remain relevant for catalog and niche purchases. Based on historical trends and current estimates, downloads likely contribute an additional 10 to 15 percent to mechanical royalty collections beyond vinyl and cassette formats.
In Q1 2025, the difference in royalties collected under Phonorecords IV compared to the previously frozen rate was approximately $582,663.84 for vinyl and cassette. Including the estimated contribution from downloads, the adjusted figure rises to approximately $670,063.42.
Projected across the full year, that’s an estimated $2.68 million in additional royalties. Over the five-year term, assuming modest growth, the cumulative increase is projected at $13.4mm.
Over the five-year term, this represents a 36.26 percent increase in mechanical royalties compared to what would have been collected under the previously frozen rate. What was once considered a throwaway revenue stream for publishers – declining, stagnant, and not worth fighting for – has shown continued growth. This more than one-third increase in payouts to rights holders for physical formats and downloads marks a meaningful correction after more than fifteen years of inaction.
If $13.4 million seems modest in the context of the full publishing economy, consider that it represents a meaningful uplift in a segment that was long considered stagnant. In a time where all publishers are seeing performance and synch revenues sinking, especially for catalog-heavy publishers, independent rights holders, and legacy artists, this correction is both economically and symbolically significant. Proof that even the smallest levers, when pulled with enough force, can move the system.