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Music Industry Drafts Digital Revenue Sharing Agreement

Under the proposed distribution model, artists would generally receive 10.5% of revenue for limited download and interactive streaming services.
Several music industry groups agreed Tuesday to change the way they distribute compensation to artists.

The Digital Media Association, the National Music Publishers' Association, the Recording Industry Association of America, the Nashville Songwriters Association International, and the Songwriters Guild of America submitted the plan in draft regulations to the Copyright Royalty judges.

"This historic agreement is the foundation for a new generation of music distribution," David Israelite, NMPA president and CEO, said in a news announcement. "This agreement will ensure that songwriters and music publishers continue to thrive in the digital age."

The new distribution model would create mechanical royalty rates for interactive streaming and limited downloads, including for subscription and ad-supported music. It contains a flexible schedule for revenue payments, with minimums in some circumstances.

"This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators, and online services," Mitch Bainwol, chairman and CEO of the RIAA, said. "The agreement demonstrates that our industries can work collaboratively to solve complex issues."

Artists would generally receive 10.5% of revenue for limited download and interactive streaming services, not counting any revenue due for performance royalties. The groups would allow some royalty-free promotional streaming.

The groups said they agree that noninteractive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners outside the scope of the draft regulations.

The agreement does not cover merchandise or permanent downloads.

The Copyright Royalty judges will likely rule on the proposal by Oct. 2.

Jonathan Potter, executive director of the Digital Media Association, said the agreement ends litigation and threats of litigation involving several of its members, allowing them to focus on fighting piracy instead.