PUBLISHERS, LABELS AGREE

The two groups had announced the tentative agreement three weeks ago (hitsdailydouble.com, 9/17).

"This agreement removes a major legal roadblock for the new on-line subscription services," said RIAA President and CEO Hilary Rosen, referring to the Pressplay and MusicNet joint ventures. "The coming subscription services may now begin licensing thousands of musical works immediately. For consumers, this will essentially mean they will have access to more and better on-line music options, sooner."

Under the agreement, which covers both streaming and downloads, the RIAA its member labels and their licensees will immediately have access to every musical work authorized to be licensed by Harry Fox.

Once rates are determined, royalties will be payable on a retroactive basis from the commencement of services. Until that time, the RIAA will pay Harry Fox an advance of $1 million toward the royalties to be determined. If the two sides do not settle on a rate during the next two years, the recording industry will pay monthly advances totaling $750,000 per year until a rate is set.

The agreement also confirms the parties' mutual understanding of the "mechanical license" aspect of copyright law, confirming that a mechanical license is required for subscription services, that the compulsory licensing provisions apply to such services, and that the license covers the server copy as well as transient and buffer copies.

"This agreement will do wonders for music lovers and the on-line music marketplace," said RIAA General Counsel and Senior Exec. VP Cary Sherman. "It confirms that the existing compulsory licensing system is available for new subscription service business models, that the mechanical license covers everything from the server copy through to the user's PC, and that the licensing process can be quick, simple and efficient."

Individual publishers represented by Harry Fox will have the opportunity to opt out of the agreement if they choose. Likewise, any subscription service or record company may deal directly with HFA or individual music publishers, if they prefer.