RIAA new net radio agreement

WASHINGTON — September 23, 2008: The RIAA, the Digital Media Association, and the National Music Publishers Association have announced a new agreement that sets mechanical royalties for interactive streaming and limited downloads, including subscription and ad-supported services. The Nashville Songwriters Association International and the Songwriters Guild of America are also parties to the agreement.

Limited downloads and interactive streaming (that is, on-demand streams of particular songs) will in most cases pay a mechanical royalty of 10.5 percent of revenue, less any performance royalties owed. This royalty goes to songwriters and publishers. Today’s agreement does not affect the controversial performance royalties, paid to copyright owners (ordinarily record labels) for Internet radio. Those royalties were substantially increased by the Copyright Royalty Board last year.

The mechanical licenses issued under the new agreement include all reproduction and distribution rights necessary to provide licensed limited downloads or interactive streams, and allow some royalty-free promotional streaming.

“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,” said RIAA Chairman/CEO Mitch Bainwol. “The agreement demonstrates that our industries can work collaboratively to solve complex issues.”

DiMA Exec. Director Jonathan Potter said, “Innovative music services will enjoy a more stable business enviroment because of this agreement, and that will benefit music fans and music creators alike. DiMA is particularly pleased with the agreement to end litigation and threats of litigation involving several of our companies so that they can focus on building innovative businesses that can effectively fight piracy, the music industry’s greatest threat.”

The agreement also confirms that non-interactive, audio-only streams don’t require reproduction or distribution licenses from copyright owners. The terms have been submitted to the Copyright Royalty Judges for approval. Additionally, the Copyright Royalty Judges are expected to rule next month on royalties for physical product and permanent downloads.

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