The action involved songwriters and music publishers against five large technology companies, who were seeking to reduce the low rate of royalties they currently pay to songwriters for using their music on their streaming services. The ruling affects only the mechanical license, which includes albums, CDs and downloads. The ruling also instigates a late fee, which means streaming companies must pay their royalty rates on time or face an 18 percent interest fee annually. Before this legislation, artists and record labels were left to create their own deals with streaming services, and oftentimes, they were limited by a content cost cap or a low percentage.
This decision was largely influenced by upcoming federal legislation known as the Music Modernization Act, which seeks to overhaul the digital mechanical licensing process.
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