The Copyright Royalty Board in Washington DC, a panel
of three judges appointed by the Library of Congress, opted to
retain the status quo and turned down a request by the National
Music Publishers Association to increase royalties from nine cents
to 15 cents on songs bought online.
Music publishers had pushed for a 15 cent 'mechanical' royalty
from downloads and CDs, while digital music services wanted it cut
to 4.8 cents.
The ruling keeps royalties on CDs, downloads and online
streaming services broadly unchanged.
It applies strictly to mechanical royalties, which are paid to
the songwriters and publishers of music, not the performers. The
royalty is paid by the entity licensing the music, which varies,
depending on the format of the recording.
For the first time the judges also set for a mechanical royalty
rate for master tones, or ring tones made from a snippet of music
from a full recording, at 24 cents, and the right to seek a 1.5%
late fee, calculated month, if labels or digital retailers fail to
pay them promptly. Copyright holders had previously negotiated
royalty payments with users.
Apple welcomed the ruling. In testimony submitted to the CRB 18
months ago the company had said that it would "most likely
not” continue to operate its iTunes Store “if it were no longer
possible to do so profitably,” according to reports.
Jonathan Potter, executive director of the Digital Media
Association, said he was pleased with the decision.
"Keeping rates where they are will help digital services and
retailers continue to innovate and grow for the next several years,
which will benefit songwriters, artists, labels and publishers,” he
said.
The Recording Industry Association of America, which represents
record labels, said it was pleased that the rate was frozen for the
first time since 1977, meaning that if song prices increase,
royalties will make up a falling percentage of the companies'
costs.
"No party got everything it wanted, yet at the end of the day,
the certainty provided by this ruling is beneficial," said Mitch
Bainwol, chief executive of the RIAA.
Involved parties will have 15 days to request a rehearing, while
the Register of Copyrights will have 60 days to review the decision
for legal error.
By the end of the latter period, the Librarian of Congress will
publish the determination in the Federal Register and once the
ruling appears there, unhappy parties have 30 days to file an
appeal.
