Music Industry Trade Groups Agree on New Royalty Rates for Digital

Having reached a consensus, major industry trade groups will submit a proposal to govern future licensing of music to current and emerging online services

Several of the music industry’s largest trade groups on Wednesday reached an agreement on royalty rates for licensing music to online music services like iTunes Match.

Ever since the dawn of digital music, the industry has not only had to grapple with how to control the illegal spread of its content – curbing piracy — but also how to properly charge for its distribution on legal services. It is of growing importance now that more than 50 percent of the music market's value comes from digital sales.

That is what this agreement tries to resolve. The Recording Industry Association of America (RIAA), National Music Publishers Association (NMPA) and Digital Media Association (DiMA) will submit a proposal to the Copyright Royalty Board (CRB) suggesting the establishment of royalties for five different kinds of new digital music business models.

““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,” Lee Knife, Executive Director of the Digital Media Association (DiMA) said in a statement. “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.”

One such business model is a paid locker service, like iTunes Match, but some of the other examples are models that the music industry sees as the future, such as subscription streaming services that “offer more than radio but less than full catalog,” according to Steve Marks, executive counsel for the RIAA.

The current royalty rates for CDs and downloads would stay the same.

“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,” Cary Sherman, Chairman and CEO of the RIAA, said in a statement.