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Labels, Publishers & Internet Broadcasters Agree On Mechanical Royalties


A diverse group of industry trade groups have jointly submitted a draft agreement to the Copyright Royalty Judges proposing mechanical royalty rates for interactive streaming and limited downloads including subscription and ad-supported services.

The group includes:

  • Digital Media Association (DiMA) representing such major online music services as AOL, Pandora, Live365, Real and Yahoo!
  • National Music Publishers’ Association (NMPA)
  • Recording Industry Association of America (RIAA) representing the major record labels
  • Nashville Songwriters Association Int'l (NSAI)
  • Songwriters Guild of America (SGA)

    Performance royalties collected by Sound Exchange are not a part of the agreement which proposes that mechanical royalties be calculated as a flexible percentage of revenue with minimum payments in certain circumstances.

    Under the proposal limited download and interactive streaming services would 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. 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 as ASCAP and others have asserted recently.

    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."