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    Music Industry Groups Await Judgment On Breakthrough Royalty Agreement

    Published on 1 May 2012 @ 9:50 pm

    By , Intellectual Property Watch

    Music industry groups in the United States recently struck what they call an “historic” agreement on mechanical royalty rates and standards in a digital age. Now, they are awaiting final approval on the agreement.

    The Recording Industry Association of America (RIAA), National Music Publishers’ Association (NMPA), and Digital Media Association (DiMA) filed an industry-wide agreement that they said “fully resolves” the Copyright Royalty Board (CRB) Rate Proceeding under Section 115 of the US Copyright Act.

    The industry announcement and submission of the 25-page agreement came on 11 April. According to industry sources, the Copyright Royalty Judges must issue a final determination no later than 15 days before the expiration of current statutory rate and terms, which is on 1 January 2013.

    The timing of the decision is at the discretion of the judges, and one of the judges recently stepped down, with a new justice expected to join in May, the source said.

    Industry is “hopeful” that the Board determination will come soon, since the agreement is collaborative. The agreement covers the period from 2013 to 2017.

    “The agreement simplifies licensing burdens for digital music and, we believe, enables music entrepreneurs to develop new business models since they can now have more cost certainty for mechanical rights,” Amy Lee of the NMPA told Intellectual Property Watch. “This is good news for music fans everywhere (and music entrepreneurs).”

    Newly created royalty-rate categories reflect newly developed music services, such as music lockers, and “anticipates soon-to-come offerings,” she said.

    “From the songwriters and music publisher perspective, we believe the agreement will help songwriters and music publishers benefit from the growing digital music market,” said Lee.

    According to RIAA, the agreement, submitted in the form of draft regulations, “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,” RIAA said. “In certain instances, royalty-free promotional streaming is allowed.”

    Non-interactive, audio-only streaming services “do not require reproduction or distribution licenses from copyright owners,” the association said. And the agreement “does not address royalty rates for physical product or permanent music downloads.”

    Highlights of the agreement (from the industry press release):

    “The settlement provides for the development of new digital music services and business models offering music to consumers by creating new rates and terms under Section 115 for five new categories, which include:
    • Mixed service bundles (for example, a locker service, limited interactive service, downloads or ringtones combined with a non-music product such as a mobile phone, consumer electronics device or Internet service)
    • Paid locker services (subscription-based locker providing on-demand streaming and downloads)
    • Purchased content lockers (a free locker functionally provided to a purchaser of a permanent digital download, ringtone or CD where the music provider and locker have an agreement)
    • “Limited offerings” (subscription-based service offering limited genres of music or specialized playlists)
    • Music bundles (bundling music products such as CDs, ringtones and permanent digital downloads)”

    The agreement “establishes a royalty rate category for these new business models and rolls forward, with limited changes, all existing rates and terms for CDs and downloads,” they said.

    Statements of support were issued by the proponents, and are as follows:

    Lee Knife, Executive Director, DiMA:
    “From the advent of internet radio services, to online music stores, on-demand streaming and more recently, cloud-based music services, digital media providers thrive on creating new ways for fans to enjoy more music whenever and wherever they want,” Knife said. “Today’s agreement paves the way for our members to continue developing exciting new business models that satisfy consumers, create greater revenue opportunities for music creators and effectively fight piracy, the music industry’s greatest threat.”

    David Israelite, President and CEO, NMPA:
    “Today’s agreement is not only an important show of industry cooperation, but a testament to the value of the creative content being provided to consumers,” said Israelite. “This agreement represents the culmination of months of discussions among the music industry, digital service providers and technology companies, and will provide more consumer choice with respect to when and how to access music while ensuring songwriters and music publishers continue to thrive in the digital age.”

    Cary Sherman, Chairman and CEO, RIAA:
    “This is a historic agreement that reflects our mission to make it easier for digital music services to launch cutting-edge business models and streamline the licensing process,” said Sherman. “This is a major win for consumers, the music community, and entrepreneurs and investors in new music services. Getting to an agreement was a challenge, and I want to thank Steve Marks, our lead negotiator, for his persistence and creativity in getting a deal done.”

    William New may be reached at wnew@ip-watch.ch.

     


    Leave a Reply

    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website. By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    We welcome your participation in article and blog comment threads, and other discussion forums, where we encourage you to analyse and react to the content available on the Intellectual Property Watch website.

    By participating in discussions or reader forums, or by submitting opinion pieces or comments to articles, blogs, reviews or multimedia features, you are consenting to these rules.

    1. You agree that you are fully responsible for the content that you post. You will not knowingly post content that violates the copyright, trademark, patent or other intellectual property right of any third party or which you know is under a confidentiality obligation preventing its publication and that you will request removal of the same should you discover that you have violated this provision. Likewise, you may not post content that is libelous, defamatory, obscene, abusive, that violates a third party's right to privacy, that otherwise violates any applicable local, state, national or international law, that amounts to spamming or that is otherwise inappropriate. You may not post content that degrades others on the basis of gender, race, class, ethnicity, national origin, religion, sexual preference, disability or other classification. Epithets and other language intended to intimidate or to incite violence are also prohibited. Furthermore, you may not impersonate others.

    2. You understand and agree that Intellectual Property Watch is not responsible for any content posted by you or third parties. You further understand that IP Watch does not monitor the content posted. Nevertheless, IP Watch may monitor the any user-generated content as it chooses and reserves the right to remove, edit or otherwise alter content that it deems inappropriate for any reason whatever without consent nor notice. We further reserve the right, in our sole discretion, to remove a user's privilege to post content on our site. IP Watch is not in any manner endorsing the content of the discussion forums and cannot and will not vouch for its reliability or otherwise accept liability for it.

    3. By submitting any contribution to IP Watch, you warrant that your contribution is your own original work and that you have the right to make it available to IP Watch for all purposes and you agree to indemnify IP Watch, its directors, employees and agents against all damages, legal fees and others expenses that may be incurred by IP Watch as a result of your breach of warranty or of these terms.

    4. You further agree not to publish any personal information about yourself or anyone else (for example telephone number or home address). If you add a comment to a blog, be aware that your email address will be apparent.

    5. IP Watch will not be liable for any loss including but not limited to the following (whether such losses are foreseen, known or otherwise): loss of data, loss of revenue or anticipated profit, loss of business, loss of opportunity, loss of goodwill or injury to reputation, losses suffered by third parties, any indirect, consequential or exemplary damages.

    6. You understand and agree that the discussion forums are to be used only for non-commercial purposes. You may not solicit funds, promote commercial entities or otherwise engage in commercial activity in our discussion forums.

    7. You acknowledge and agree that you use and/or rely on any information obtained through the discussion forums at your own risk.

    8. For any content that you post, you hereby grant to IP Watch the royalty-free, irrevocable, perpetual, exclusive and fully sub-licensable license to use, reproduce, modify, adapt, publish, translate, create derivative works from, distribute, perform and display such content in whole or in part, world-wide and to incorporate it in other works, in any form, media or technology now known or later developed.

    9. These terms and your posts and contributions shall be governed and interpreted in accordance with the laws of Switzerland (without giving effect to conflict of laws principles thereof) and any dispute exclusively settled by the Courts of the Canton of Geneva.

     

     
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