Despite what you've read elsewhere, Internet radio deal NOT done!

[Gene Savage]

FROM: Radio & Internet Newsletter:

RAIN 9/23: Despite what you've read elsewhere, Internet radio deal NOT done!
·Sep 23, 10:18 AM
Posted by: Paul Maloney

INDUSTRY GROUPS REACH ROYALTY DEAL ONLY ON “MECHANICALS” FOR ON-DEMAND SERVICES: DiMA (the Digital Media Association) and several music industry groups have announced a “breakthrough agreement” covering interactive (that is, “on-demand”) streaming and “limited download” services.

Various industry news sources are reporting this morning that this is a deal that “saves” Internet radio, but the truth is that this deal is not about Internet radio at all. It’s about services like Rhapsody in which listeners can request a specific song right now — and even for those services it only covers one of the royalties involved, and not the critical one.

According to the terms of the deal, “limited download and interactive streaming services will generally pay a mechanical royalty of 10.5% of revenue, less any amounts owed for performance royalties,” according to a DiMA press release. The beneficiaries of this royalty are music composers and publishers.

Though this rate does not concern non-interactive webcasting services (i.e. Internet radio) directly, parties to the agreement “confirmed that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.” Some industry observers had feared that webcasters, in addition to the two performance royalties they pay (one to publishers/composers, and one to recording copyright owners/performers), would be liable for the “mechanical” right (which covers the reproduction of recordings). This agreement takes that worry off the table (at least for the life of this deal).
Other parties to the agreement include the National Music Publishers’ Association (NMPA), the Recording Industry Association of America (RIAA), the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA).