Organizations representing the music publishers and songwriters, major record labels, digital music services and cellular phone companies have announced an agreement setting mechanical royalty rates and standards that supports a slate of new cutting-edge business models to help consumers access and enjoy music.

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

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 25-page proposed agreement will be submitted to the CRB by the various parties and resolves the pending mechanical royalty rate proceedings without litigation. The agreement covers 2013-2017 and must be formally be approved by the CRB. It 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.   

Lee Knife, Executive Director of DiMA says, "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. 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." 

"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 NMPA President/CEO David 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."

"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," adds Cary Sherman, Chairman/CEO of the RIAA. "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."