Today is a historic day for songwriters and music publishers in America. Below is a press release just issued by the National Music Publishers’ Association (NMPA), the Recording Industry Association of America (RIAA) and the Digital Media Association (DiMA), together with the Nashville Songwriters Association International (NSAI) and the Songwriters’ Guild of America (SGA), announcing 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 yesterday, proposes for the first time mechanical royalty rates for interactive streaming and limited downloads, including for subscription and ad-supported services.
Although the parties have not been able to reach a settlement on rates for physical products, permanent digital downloads or ringtones, and await the Judges’ decision on or before October 2, this agreement resolves seven years of uncertainty and disagreement over how songwriters and music publishers will be compensated for interactive streaming and limited downloads.
A special thanks to the NMPA Board of Directors, the staff, and the attorneys of the NMPA whose hard work over the last year led to this remarkable agreement.
Sincerely,
David Israelite
President and CEO
National Music Publishers’ Association
***FOR IMMEDIATE RELEASE***
September 23, 2008
MAJOR MUSIC INDUSTRY GROUPS ANNOUNCE BREAKTHROUGH AGREEMENT
WASHINGTON —In a breakthrough that will facilitate new ways to offer music to consumers online, 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), today 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 for 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 percent of revenue, less any amounts owed for performance royalties. In certain instances, royalty-free promotional streaming is allowed. Outside the scope of the draft regulations, 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 October 2.
“This historic agreement is the foundation for a new generation of music distribution,” said David Israelite, NMPA President and CEO. “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.”
“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 Mitch Bainwol, Chairman and CEO, RIAA. “The agreement demonstrates that our industries can work collaboratively to solve complex issues.”
“Innovative music services will enjoy a more stable business environment because of this agreement and that will benefit music fans and music creators alike,” stated Jonathan Potter, Executive Director of DiMA. “DiMA is 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, the music industry’s greatest threat.”
Roger Faxon, Chairman and CEO of EMI Music Publishing, who was independently represented in the CRB, also lauded the agreement. “We’re very pleased that these matters have finally been agreed, and that we have reached an agreement that is good for the songwriters we represent, and good for music consumers. This is a first step to 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.”
“NSAI, the Nashville Songwriters Association, is proud to be part of this historic agreement which assures that America’s music creators are compensated, music consumers benefit from the many new choices provided by digital technology, and those who invest in America’s intellectual property are rewarded,” said Steve Bogard, President, Board of Directors, NSAI.
“Digital music has become the ubiquitous soundtrack of American life,” said Rick Carnes, President of SGA. “The digital age has helped American songwriters create more value for both the economy and the culture than ever before. With this deal, the Songwriters Guild of America, the music publishers, the record labels, and the digital music services have come together in an historic agreement that creates a workable payment structure and a fair rate for songwriters in the digital music distribution models of today and tomorrow.”
Agreement Facts:
• The agreement proposes mechanical royalty rates that cover both limited downloads and interactive streaming, including when offered by subscription and ad-supported services.
• The percentage rate structure in the agreement provides much-needed flexibility for new business models.
• The agreement permits the use without payment of certain kinds of promotional streams, in the interest of encouraging paid uses of musical compositions.
• The agreement confirms that the mechanical licenses issued under its provisions will include all reproduction and distribution rights necessary to provide the licensed limited downloads or interactive streams.
• Outside the scope of the draft regulations, the parties confirmed that noninteractive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.
**Special Update:
NMPA Hails Copyright Board’s Rate Decision
Positive Result for Songwriters and Music Publishers
October 2, 2008, the Copyright Royalty Board announced new mechanical rate terms for physical products (such as CDs), permanent downloads (such as iTunes) and ringtones. Songwriters and music publishers will be paid a rate of 9.1 cents for digital downloads. The CRB judges also ruled that the rate for physical products will remain at 9.1 cents. Each will be subject to an overtime rate. The CRB judges also established for the first time a rate of 24 cents for each ringtone subject to the Section 115 mechanical license. Furthermore, music publishers will have the right to seek a 1.5 percent late fee, calculated monthly.
David Israelite, President and CEO of the National Music Publishers’ Association – which represented songwriters and music publishers before the Board – hailed the decision as a positive development for all songwriters and music publishers.
“We are happy that the judges recognize the importance of songwriters and music publishers to the music industry,” said Israelite. “This decision represents an important milestone for the music industry. 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. In the end, songwriters and music publishers will have incentive to create and market music, and music fans will reap the rewards.”
The announcement is the culmination of a trial that began in January, and marks the first time the Board has established mechanical royalty rates for songs distributed digitally.