At the same time Amazon is asking local politicians to support an incentive package to bring corporate jobs to Music City, the company is appealing a federal rate court decision that would dramatically increase streaming service payouts to songwriters.

The juxtaposition is not lost on one Metro Council member, who says he plans to oppose the incentive package over the tech giant’s posture on the songwriters issue.

Councilman Jeff Syracuse represents the Donelson area, and in his day job is an executive for the performance rights organization BMI.

Syracuse said he conveyed his opposition to the incentive package to Amazon earlier this week. BMI is one of the nation’s two largest music licensing organizations in charge of collecting and paying songwriters and music publishing companies.

Metro Council is scheduled to vote on the incentive package next week. The legislation, backed by Mayor David Briley, provides Amazon $500 for each job created. The company has promised 5,000 jobs, giving the local incentive package a value of up to $2.5 million annually and a cumulative total of $17.5 million over 7 years, according to analysis by the Metro Council attorney.

Tech titans’ appeal sparks anger 

Songwriters and music publishers were enraged last week when Amazon, Spotify, Google and Pandora announced plans to appeal last year’s landmark rate court ruling that increased digital royalty payouts by 44 percent. After months of hearings, the rate court ruling in 2018 increased the percentage of revenue that streaming companies must pay to songwriters and publishers from 10.5 percent to 15.1 percent over the next five years.

Apple Music, the world’s second most popular streaming service behind Spotify, elected not to appeal that decision.

Syracuse said it is unfair for companies to choose Nashville because of its creative community, and then stake out policy positions that are hostile toward songwriters. Syracuse said the Copyright Royalty Board’s rate increase came on the heels of a difficult two-decade stretch for Nashville songwriters.

The trade organization Nashville Songwriters Association International estimated that the number of professional songwriters dropped by about 80 percent on the heels of music piracy rising in popularity in the late 1990s. In recent years, streaming revenue has been growing and the overall music industry has followed suit, but songwriters have long argued they’ve been cut out of the new music economy. That’s why last year’s rate increase was such welcome news.

“It’s been interesting to watch, not only have the federal laws impacted songwriters’ ability to make a living, but here in Nashville with the issue of affordable housing and overall cost of living, they’re getting hit on two sides,” Syracuse said. “So songwriters are taxpayers too. Apple has chosen not to appeal to the copyright royalty board decision, but (the other four services) did.

“For Amazon, this streaming service is a drop in the bucket of their overall business. This is what I’ve been doing for 20 years. I haven’t been lining shareholders’ pockets. I’ve been lining songwriters’ pockets. I could not in good conscience vote for a taxpayer-funded job incentive when Amazon’s stance on streaming rates is not in favor of the job of songwriters.”

Amazon invests in country music 

Amazon contends it is appealing the Copyright Royalty Board’s decision primarily because it disagrees with the legal precedent that the ruling set. For instance, the company disagrees with the new rate being applied retroactively to last year and with the process the court used to arrive at its decision. Specifically, streaming companies weren’t able to offer evidence for how the higher rates would affect their business.

Spotify, the world’s most popular streaming service, is still operating in the red. Streaming services argue that the industry has benefited from their major investments in music, and that a large rate increase would harm the growth of the overall music ecosystem.

And while Amazon may be suing to appeal the rate court’s decision, the company has invested substantially in the creative community in Nashville. Amazon’s streaming operation has a local office and the company has partnered with Garth Brooks, whose entire catalog is exclusively on Amazon Prime, and other artists for major promotional efforts. Country music is perhaps the most important genre to Amazon’s streaming platform.

Amazon spends about 70 percent of its overall streaming revenue on royalty payouts to artists, record labels, publishers and songwriters.

Amazon officials did not immediately comment for this story. 

► Amazon in Nashville: No incentives if Metro workers don’t get raises, Metro council says

‘It’s not Send-You-A-Package, USA’ 

Bart Herbison, executive director for NSAI, said the organization has not called on council members to oppose the incentive plan because of the royalty rate dispute. But, Herbison said he appreciated Syracuse’s stance and that local politicians need to be aware of the how the royalty issue will impact Nashville songwriters.

“NSAI understands the important economic impact that Amazon’s move here will have. That’s not lost on us,” Herbison said. “Having said that, Amazon needs to get the message that council members who will vote against this package because of their litigation with songwriters, that’s an important message to send.

“I would suggest this to the powers that be locally and globally with Amazon, especially if you want to be a partner with the Nashville community. This is Music City, USA. It’s not Send-You-A-Package, USA. And secondly, ‘It all begins with a song.’ The timing is grievously unfortunate that they would appeal the first substantial pay raise that songwriters have had in over 100 years while they’re trying to become a member of this community.”

National Music Publishers Association President and CEO David Israelite said his organization is also not calling on council members to oppose the incentive plan. But Israelite echoed Herbison that stakeholders need to understand the broader effects the rate court dispute will have, which is why he said NMPA’s focus right now is raising awareness.

Earlier this year, President Donald Trump signed into law the Music Modernization Act, which, among other tenets, created a new free-market standard the rate court must use when determining digital royalty rates. That new standard is expected to be more favorable to songwriters and publishers over time.

Amazon and the other streaming services backed that legislation because it eased the licensing process for them and also removed the legal liability for failing to properly licensing a song. Apple and Spotify were hit with expensive lawsuits related to licensing disputes with songwriters and publishers.

Under the Music Modernization Act, a new licensing collective run by publishers and songwriters will oversee the licensing of songs and the streaming services can’t be sued.

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Reach Nate Rau at 615-259-8094 and nrau@tennessean.com. Follow on Twitter @tnnaterau.