Jeffrey Steele Earns BMI Icon Honor, MLC Surpasses $4.2 Billion, and Copyright Office Opens Streaming Fraud Inquiry

How The Music Business Works - Issue #82

October 8, 2026

Welcome back to How the Music Business Works.

Congratulations to songwriter Jeffrey Steele, who will be honored with the BMI Icon designation at this year's Country Awards. It is a privilege to work alongside one of Nashville's most decorated voices, with more than 60 chart-topping hits and a catalog that has shaped the sound of country music for over three decades.

A busy week in music publishing and rights administration rounds out the edition. The Mechanical Licensing Collective announced it has surpassed $4.2 billion in royalty distributions since 2021 and will begin paying out unclaimed black box royalties starting April 2027. The Phonorecords V battle continues to heat up, with major labels defending their proposed physical rate settlement against conflict of interest accusations, while Spotify's expansion of its audiobook service to over 180 markets adds new weight to the bundling dispute at the center of the streaming rate fight.

The US Copyright Office has opened a public inquiry into music streaming fraud, arriving just a day after Michael Smith became the first person in US history sentenced to prison for the crime, setting a precedent the industry hopes will deter future bad actors.

Here’s what you need to know.

BMI Names Jeffrey Steele a BMI Icon at 74th Annual Country Awards

BMI will honor songwriter Jeffrey Steele with its Icon designation at the 74th annual BMI Country Awards, recognizing him as one of the ultimate architects of modern country music. The invitation-only event takes place November 17 at BMI's Nashville office, hosted by BMI CEO Mike O'Neill alongside senior BMI executives. In receiving the award, Steele joins a distinguished list of country legends including Dolly Parton, Willie Nelson, Merle Haggard, Loretta Lynn, and Kris Kristofferson. A BMI affiliate since 1981, Steele has earned more than 60 chart-topping hits and over 34 BMI Country and Pop Awards. His catalog includes Tim McGraw's "The Cowboy in Me," Rascal Flatts' "What Hurts the Most" and "My Wish," Keith Urban's "Raise 'Em Up," and Zac Brown Band's "Knee Deep," among others. The seven-time Grammy nominee has been inducted into the Nashville Songwriters Hall of Fame and recognized by the Country Music Hall of Fame as a "Poet and Prophet." The evening will also reveal the Country Songwriter, Song, and Publisher of the Year.

The MLC Surpasses $4.2 Billion in Royalty Distributions Since 2021

The Mechanical Licensing Collective has distributed more than $4.2 billion in royalties to songwriters and publishers since launching operations in January 2021, a milestone announced at its Annual Membership Meeting last week. The organization has processed nearly $5 billion in total royalties over that period, with a match rate of more than 92% across all royalties processed through its September distribution. The MLC also announced it will begin distributing remaining unclaimed accrued royalties on a market share basis in April 2027, the first time it will use the mechanism built into the Music Modernization Act. The payout will start with royalties from January 2021 usage, proceeding one month at a time, with The MLC having held those funds for more than twice the statutory minimum holding period. The organization now counts more than 100,000 members and maintains a public database of over 60 million works.

Music streaming fraud inquiry launched by US Copyright Office

The US Copyright Office has opened a public inquiry into music streaming fraud, seeking information on how it is carried out, its economic impact, and its relationship to AI-generated music. Written comments are due November 23. The inquiry follows a request from House Judiciary Committee member Scott Fitzgerald, who asked the Office to examine how generative AI is contributing to fraud and the resulting effects on royalty distribution across sound recordings, performance rights, and mechanicals. The notice arrived one day after Michael Smith was sentenced to 18 months in prison for the first criminal streaming fraud case in US history, in which bot accounts streamed hundreds of thousands of AI-generated songs to generate over $8 million in fraudulent royalties. Among the inquiry's subjects are industry practices that may inadvertently enable fraud, the effectiveness of content verification and royalty clawback policies, metadata standardization, and the potential role of organized crime and money laundering. The Copyright Office also asks whether legislation providing for no-fault injunctive relief could be a useful tool against streaming fraud.

Major Labels Deny Conflict of Interest in Phonorecords V Physical Rate Negotiations

The Phonorecords V proceeding is raising familiar but urgent questions about whether the major music companies can fairly negotiate mechanical royalty rates when they sit on both sides of the table as labels and publishers. On the physical side, a proposed settlement backed by the NMPA, major labels, A2IM, and songwriter groups would continue the current inflation-linked rate structure from 2028 to 2032, starting from the 12-cent base set in 2023. Opponents including the SGA, Word Collections, and Eight Mile Style argue that reopens a debate about whether 12 cents was ever a fair starting point, and that the majors' overlapping ownership creates a structural conflict of interest that drives payments to writers and independent publishers down. The majors and NMPA have pushed back, arguing the settlement was negotiated at arm's length and that independent publishers and songwriters are represented at the table. On the streaming side, the bigger fight may be less about the headline rate and more about the bundling discounts that have allowed Spotify and Amazon to reduce what they pay writers and publishers. With AI licensing deals now being negotiated outside the CRB process, the conflict of interest argument is expected to intensify further if those deals follow the streaming model's pattern of favoring recording rights over publishing.

Spotify Expands Audiobook Access to 180 Markets as Publisher Battle Continues

Spotify is expanding its audiobook offering from 22 markets to over 180, as its Audiobooks+ tier surpasses one million subscribers. The standalone tier, priced at $11.99 per month for 30 hours of listening, generated approximately $100 million in annual recurring revenue as of July, with monthly audiobook listeners growing nearly 40% over the past year. The expansion adds fuel to an already contentious dispute with music publishers, who have argued that Spotify's bundling of audiobook access with music subscriptions is a deliberate mechanism to reduce its mechanical royalty obligations to songwriters and publishers. Spotify's growing audiobook business strengthens its case that the bundle reflects genuine consumer demand rather than a royalty-reduction strategy, a debate that is now central to the Phonorecords V proceedings before the Copyright Royalty Board.

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