It was recently reported that in the midst of the Copyright Royalty Board (CRB) hearings, the publishers, record labels and digital music providers (RIAA, DiMA, etc.) agreed to a settlement on two of the five royalty rates scheduled to be set this October by the CRB. This news surfaces from comments made by National Music Publishers' Association’s president/CEO David Israelite on June 18th, 2008, at a recent trade association meeting in New York. Specifically, it seems the sides have reached an agreement on the rates for limited downloads and Internet streaming, but still remain worlds apart on the other rates, which include, digital permanent downloads and ringtones. The confidential agreement still requires approval by three CRB judges, however, there is little chance they will balk at a pack reached by the two sides.

Ad-supported music distribution services offering streaming music, limited downloads, or both, should be extremely concerned at this latest development. While it is certainly encouraging to see the sides agreeing on some of the rates at issue, the publishers have been fervently opposed to any rates purely based on a percentage of revenue given the enormous difficulty in accounting for the many different business models, alternative accounting systems and various deductions and other methods of calculating revenue. As such, the publishers have continuously pushed for a minimum calculation for determining the monies they are owed, whether based on plays, streams, downloads or subscribers (e.g., a penny rate or amount per individual subscriber) in order to assure themselves revenue without the need to confront and investigate every business model turning to compulsory licenses.

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