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Wednesday, April 11, 2012
Music Industry Groups Reach Agreement on Royalty Rates and Standards

Organizations representing the music publishers and songwriters, record labels, digital music services and cellular phone companies today announced an agreement setting mechanical royalty rates and standards.

The deal creates new rates and terms for a variety of new "cutting-edge business models," including cyberlockers and subscription-based services.

The "historic" agreement was announced Wednesday by the Recording Industry Association of America, the National Music Publishers Association and the Digital Media Association (DiMA).

Together, they will submit a proposed agreement to the CRB that carries over, with limited changes, existing rates and terms for CDs and downloads. The parties are also proposing adding five new categories under Section 115 of the Copyright Act, which covers mechanical royalties:

- 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 also resolves the pending mechanical royalty rate proceedings without litigation.

"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," said Cary Sherman, Chairman and CEO, 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."

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