US copyright board freezes download royalty rate

Stephen Withers
Friday, 03 October 2008 03:24

Business IT - Technology

Furthermore, the Board endorsed an agreement reached last month between DIMA, the NMPA, the RIAA and various songwriters' associations for mechanical royalty rates for interactive streaming and limited download services, including ad-supported and subscription services.

These include services that stream specific songs on request as opposed to 'Internet radio' streaming where the listener has no say in the songs played, and 'all you can eat' subscription services that employ DRM to download as many songs as they like, on the proviso that they will only be playable for as long as the customer continues to pay a subscription.

Examples of the latter include Napster To Go and and Rhapsody.

Such services will normally pay royalties of 10.5 percent of revenue (less any amounts owed for performance royalties), though there are provisions to vary the percentage and to levy minimum payments in some circumstances.

Even though the music publishers were pushing for increased royalty rates, NMPA president and CEO David Israelite described the decision as a positive development. That's presumably because DIMA (which represents companies such as Apple) was pushing for a reduction in the rate.

"We are happy that the judges recognize the importance of songwriters and music publishers to the music industry," said Israelite.

"Coupled with the historic agreement announced two weeks ago, 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."

Now here's the part that could confirm the theory that mobile phones rot your brain: the Board also established a 24 cent royalty on ringtones.

Yep, the music publishers will receive more than twice as much when a ringtone - which, after all, is just a snippet from a song - is sold than they do when someone buys the complete song. Is this madness?

Well, yes and no. It is crazy, but the source of the craziness is the people that seem happy to spend $1.99 or more for a ringtone when the full song can be purchased for 99 cents or less.

You ringtone buyers have made your bed, now lie in it.