US copyright board freezes download royalty rate

Stephen Withers
Friday, 03 October 2008 04:24

Business IT - Technology

The US Copyright Royalty Board has decided the royalty rate paid to music publishers in respect of CD and digital download sales should remain unchanged. Good news for music buyers and for Apple?

The background to the decision is that the three main parties had very different ideas about what should happen.

The National Music Publishers' Association (NMPA) had called for the rate increased from 9.1 cents to 15 cents per song.

The Digital Media Association (DIMA, which represents online content vendors including Apple) wanted either a reduction to 4.8 cents or a royalty of 6 percent of applicable revenues.

The Recording Industry Association of America (RIAA) sought the replacement of the per-track method with a royalty of 8 percent of wholesale revenue.

The Board ruled that the royalty rate for physical products (eg, CDs) should remain at 9.1 cents per song, and that the rate for digitally distributed songs purchased outright should be the same, formalising the current practice.

This should satisfy Apple, which had previously threatened to close the iTunes Store if royalty rates were increased.

It's also good news for consumers in that any increase in royalties would presumably have translated into higher prices.

But there's more to the ruling than CD and iTunes Store style downloads - see page two.