Labels reach deal on digital music distribution
Record labels and online music companies announced an agreement on payments to songwriters and music publishers for some forms of digital distribution, bringing more predictability to the market.
The agreement, as proposed to federal regulators, covers interactive streaming of music and downloads that come with restrictions on their use, industry groups including the Digital Media Association and the Recording Industry Association of America said in an e-mailed statement.
The deal, which doesn't cover permanent music downloads, establishes a rate of 10.5 percent for the so-called mechanical royalty, according to the statement. Before now, payment rates had to be negotiated separately with each music company.
"The market for on-demand streams in various forms can now fully develop because up until now there hadn't been certainty," Roger Faxon, chief executive officer of EMI Music Publishing, said in an interview. "It will allow that form of digital use to expand, and that's why all the parties came to an agreement."
The National Music Publishers Association, the Nashville Songwriters Association International and the Songwriters Guild of America also joined in the agreement.
The arrangement "provides a flexible structure to support innovative business models," Mitch Bainwol, CEO of the Recording Industry Association, said in the statement. The group's members include the labels owned by the four major record companies, Vivendi Sa's Universal Music Group, Sony Music Entertainment Inc., EMI Group PLC, and Warner Music Group Corp.
"Innovative music services will enjoy a more stable business environment because of this agreement," said Jonathan Potter, executive director of the Digital Media Association, whose members include Yahoo! Inc., Napster Inc. and Microsoft Corp.
The U.S. Copyright Royalty Board, which is to consider the agreement, should announce a ruling by Oct. 2 on rates for permanent downloads and for physical products such as DVDs, the group's statement said.