Royalty Board Music Ruling Hits The Right Note
Songwriters and music publishers in the United States will now be paid 9.1 cents per digital download sold after years of digital music services being allowed to license music without permission from rights holders as long as they paid other royalties and abided by certain conditions. A deal struck by the National Music Publishers Association and the Recording Industry Association of America in 1997 set the per-song fee for physical recordings like compact discs at 9.1 cents but did not address digital delivery, which has been popularized in recent years by services like Apple's iTunes music store. The board rejected an appeal that publishers be moved to a percentage rate rather than a penny rate.
The 109th Congress considered legislation to set royalty rates but the bill fizzled and did not reappear this session. At the beginning of the proceeding before the three-judge Copyright Royalty Board, publishers sought a higher rate while music labels asked for a lower rate. Digital media services also wanted lower rates. Under the decision, the rate for CDs and digital downloads will be frozen for five years, which Digital Media Association Executive Director Jonathan Potter said will "keep royalty rates stable" as digital services and retailers continue to grow. His group represents iTunes, Amazon.com, Best Buy and others.
The panel also established for the first time a rate of 24 cents for each ringtone subject to the so-called Section 115 license. Additionally, music publishers will have the right to seek a 1.5 percent late fee for payments, calculated monthly. NMPA President David Israelite said he was pleased with the decision, which came on the heels of an agreement between musicians, publishers, record labels and high-tech firms that proposed for the first time mechanical royalty rates for interactive streaming and limited downloads, including for subscription and advertising-supported services.
Under that accord, limited download and interactive streaming providers would pay 10.5 percent of revenue, less any amounts owed for performance royalties. Israelite said that being dealt a percentage rate for that sector of the digital music industry was acceptable because of market differences. "These events will bring clarity and order to an environment that for the past decade has been hampered by litigation and uncertainty on all sides," Israelite said. RIAA CEO Mitch Bainwol said "no party got everything it wanted" but the certainty provided by the royalty board's ruling is beneficial to all.
The Harry Fox Agency, which administers over 15.2 million licenses for almost 36,000 publisher catalogs, said it is ready to implement the new rates, including the payment of all retroactive royalties for subscription services, which the agency has been licensing since 2001. Record labels, online music services, and other licensees will include those royalties in their quarterly reports starting 180 days after the rates take affect.
(Photo Credit: Library of Congress via Flickr)
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Intellectual Property
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