PUBLISHERS AND LABELS REACH TENTATIVE AGREEMENT

Sources close to the matter put the licensing fee of the tentative agreement at $1 million, which the labels would pay in advance, although it wasn’t clear whether that number represented a per-label fee or total amount. The cool million would cover the use of the music over the next two years.

If the publishers and the labels—who are currently continuing to negotiate to set a final royalty rate—can’t come to an agreement, the issue is expected to be decided by the U.S. Copyright Office. If no rate is set after the expiration of the two-year period, the labels are expected to pay advances of $750,000 a year. Again, it was unclear whether this amount was per label or a total.

The agreement covers both streaming and downloads.

The deal would clear the way for online digital music distribution services MusicNet (the EMI/Warner/BMG/RealNetworks joint venture) and Pressplay (the Sony/UMG joint venture) to get off the ground. Without an agreement, the Journal reported, the initiatives risked provoking copyright suits by music publishers. While the labels control the recordings of the songs, the publishers control the rights to the songs themselves.

The record labels have been represented in the talks primarily by the Recording Industry Association of America while the publishers have had the National Music Publishers’ Association (parent company of the Harry Fox Agency) spearheading their side. The tentative deal covers all of the RIAA’s member labels, as well as any company that receives a license from them. Although most publishers are expected to sign on to the deal, companies represented by Harry Fox can opt out of the pact if they choose.

Neither the RIAA or the NMPA offered a comment.

While this agreement would clear a major roadblock for the labels to move forward in their online distribution plans, some top artists could still block the inclusion of their songs, thanks to decades-old contracts that weren’t written broadly enough to guarantee the labels the rights to future digital applications.