[Updated] New Mechanical Rates For Digital Music

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• April 11, 2012

The RIAA, NMPA and DiMA are filing an industry-wide agreement setting mechanical royalty rates for five new digital music categories.

The 25-page proposed agreement will be submitted to the CRB for formal approval. The agreement covers 2013-2017 and 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.

The settlement provides for the development of new services of digital music and business models offering music to consumers by creating new rates and terms under Section 115 of the Copyright Act for these five categories:

· 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; mechanical rate will be 11.35% of revenue or 21% of total content cost, whichever is greater
· Paid locker services—subscription-based locker providing on-demand streaming and downloads; 12% of revenue or 20.65% of total content cost or 17 cents per subscriber, whichever is greater
· 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; 12% of revenue or 22% of the total cost of content, whichever is greater
· Limited offerings—subscription-based service offering limited genres of music or specialized playlists; 10.5% of revenue or 21% of total cost or 18 cents per subscriber, whichever is greater
· Music bundles—bundling music products such as CDs, ringtones and permanent digital downloads; 11.35% of revenue or 21% of total content cost, whichever is greater

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Sarah Skates is Sr. News Editor of MusicRow Enterprises. Now in her tenth year with the company, she contributes to musicrow.com and the print magazine. She welcomes your inquiries to sskates@musicrow.com. Please send press releases, photos, and news items to news@musicrow.com.

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