Publishers, Songwriters, Record Companies Agree to License Music for New Internet Subscription Services9 Oct, 2001 By: Hive News
The National Music Publishers' Association (NMPA), The Harry Fox Agency Inc. (HFA) and the Recording Industry Association of America (RIAA) announced Tuesday that they have reachedagreement on the licensing of musical works for new subscription services on the Internet.
"This agreement removes a major legal roadblock for the new online subscription services," said RIAA president and c.e.o. Hilary Rosen. "The coming subscription services may now begin licensing thousands of musical works immediately. For consumers, this will essentially mean they will have access to more and betteronline music options, sooner," Rosen said.
"This is good news for songwriters and music publishers who can now promote their music over this exciting new outlet and for the Internet companies poised to make it happen," said Irwin Z. Robinson, chairman, NMPA, HFA and the Famous MusicPublishing Companies.
"This landmark agreement confirms that the streaming of music on demand requires a mechanical license under the U.S. Copyright Act," said Edward P. Murphy, president & c.e.o., NMPA. "We are pleased to have reached a consensus with the record industryon this key issue, enabling us to move forward on the matter of determining what the royalty rate for such streaming will be."
Under the agreement, the RIAA -- and all its member labels and their licensees, including the new online subscription services -- will immediately have access to every musical work authorized to be licensed by the HFA, thelargest agency in the industry for licensing reproductions and distributions of musical works. HFA will issue licenses for subscription services offering on-demand streaming and limited downloads (i.e. downloads that can be played only for a limited period of time or number of times).
Once rates are determined, royalties will be payable on a retroactive basis from the commencement of services. Pending that determination, the RIAA will pay HFA an advance of $1 million toward the royalties to be determined. If the two sides do not settle on a rate during the next two years, therecording industry will pay monthly advances totaling $750,000 per year until a rate is set.
"I am thrilled with the agreement. The HFA stands ready to fulfill the licensing, collection and alloperational aspects of this Agreement," said Gary L. Churgin, president & c.e.o., HFA. "This breakthrough in the licensing of music on the Internet demonstrates the ability of the songwriting andmusic publishing community and the record industry to achieve the right balance that benefits consumers as well as the entire music industry."
Under the agreement, the licensing process will be expedited, allowing for "bulk licensing" of musical works. The agreement also confirms the parties' mutual understanding of the relevantcopyright law -- namely that a mechanical license is required for these types of subscription services, that the compulsory licensing provisions apply to such services, and that the license covers the servercopy as well as transient and buffer copies.
"This agreement will do wonders for music lovers and the online music marketplace," said RIAAgeneral counsel and senior executive v.p. Cary Sherman. "It confirms that the existing compulsory licensing system is available for new subscription service business models; that themechanical license covers everything from the server copy through to the user's PC; and that the licensing process can be quick, simple and efficient."
Publishers represented by HFA will have the opportunity to opt out of the licensing agreement if they so elect. Likewise, any subscription service or record company may deal directly with HFA orindividual music publishers, if they prefer.