ONLINE MUSIC GETS BOOST

Is the path now cleared for the future of digital music?

In a breakthrough that will facilitate online music distribution, the Digital Media Association (DiMA), the National Music Publishers’ Association (NMPA) and the Recording Industry Association of America (RIAA), together with the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA), have announced an agreement on how music creators will be compensated for music distributed through certain online models.

The agreement, in the form of draft regulations submitted to the Copyright Royalty Judges, proposes for the first time mechanical royalty rates for interactive streaming and limited downloads, including subscription and ad-supported services. The agreement proposes a flexible percentage of revenue rate structure, with minimum payments in certain circumstances.

Limited download and interactive streaming services will generally pay a mechanical royalty of 10.5% of revenue, less any amounts owed for performance royalties. In certain instances, royalty-free promotional streaming is allowed.

The parties confirmed that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.

The agreement does not address royalty rates for physical product or permanent music downloads. The Copyright Royalty Judges are expected to issue a ruling on those rates on or before Oct. 2.

“This historic agreement is the foundation for a new generation of music distribution,” said NMPA President/CEO David Israelite. “This agreement will ensure that songwriters and music publishers continue to thrive in the digital age. I am grateful for the good faith efforts of everyone involved in the discussions leading to this important announcement.”

Added RIAA boss Mitch Bainwol: “This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators and online services.”

DiMA Executive Director Jonathan Potter commented: “We are particularly pleased with the agreement to end litigation and threats of litigation involving several of our member companies, so that they can focus on building innovative businesses that can effectively fight piracy.”

EMI Music Publishing Chairman/CEO Roger Faxon praised the agreement. “This is a first step in establishing fair rates that properly compensate writers for their creative efforts, and we'll continue to work hard to establish a framework that properly reflects the value of songs in all their digital forms.”