Mechanical Royalty Deal Reached, But Net Radio Still On The Hook
September 23, 2008 at 9:02 AM (PT)
RADIO AND INTERNET NEWSLETTER Editor PAUL MALONEY has read the fine print of the today's announcement of a royalty deal and concluded that the agreement doesn't cover Internet Radio's royalty rate at all. The agreement between DiMA (the DIGITAL MEDIA ASSOCIATION) and several music industry groups solely covers mechanicals for on-demand services, such as streaming and "limited download" services.
"It’s about services like RHAPSODY in which listeners can request a specific song right now -- and even for those services it only covers one of the royalties involved, and not the critical one," he wrote.
Although the just negotiated rate does not directly impact non-interactive webcasting services such as Internet radio, the pact does confirm that "non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners." Translation: While Net radio interests currently pay two performance royalties (one to publishers/composers, the other to recording copyright owners/performers), they are not liable for "mechanical" rights (ie: the reproduction of recordings).
Bottom line: Net radio parties such as PANDORA are still on the hook for royalty rates that could threaten their very existence.