Music industry settles digital royalties quarrel

The eight percenters

By Chris Williams • Get more from this author

Posted in Financial News, 29th September 2006 10:34 GMT

Free whitepaper – PowerEdge energy Smart brochure

A long-running digital music royalties spat between record companies and organisations collecting on artists' behalf has been settled.

Copyright holders will net eight per cent of the gross earnings from their work, less VAT. A minimum of four pence will be paid if tracks are discounted.

An alliance of the Mechanical Copyright Protection Society and the Performing Rights Society (MCPS-PRS) had proposed a new licence to cover electronic distribution. MCPS-PRS was demanding a 12 per cent cut of revenues from digital sales of whole tracks, above the 6.5 per cent it currently collects on CDs. Mobile ringtones are not covered by the new arrangement.

At the time, BPI general counsel Geoff Taylor complained: "The licence that the alliance is trying to impose for online music is unreasonable and unsustainable. It is charging a royalty rate on a download that is double the rate it charges for a song on a CD."

We reported the dispute last year here.

The BPI, backed by distributors like iTunes, took its grievances to the Patent Office's Copyright Tribunal, which was due to rule yesterday. The last-ditch agreement avoids the two parties being bound by the Copyright Tribunal's decision.

The two sides gave themselves a pat on the back for wasting the Patent Office's time. In a joint statement they said the deal would drive the development of the digital music market, which at 34 million legitimate sales so far this year, has already broken last year's total figures, according to the Official UK Charts Company.

Judgment on other aspects of the squabble, including an issue the mobile operators and iTunes have, has been postponed until November or early December. ®

Free whitepaper – Optimizing the data center for cost and efficiency