Many people have asked me to explain the current status of royalty payments for online music.

A thorough discussion of this past year’s agreement on mechanical royalties was produced by my friends at the Future of Music Coalition.

There is also a good summary on the meeting of the Copyright Royalty Board this past fall here.

The royalties that songwriters receive from CD sales and digital downloads will remain the same, the same for both media and the same as the current rate: 9.1 cents per song. The rate for ringtones will increase to 24 cents a song, above even the 15 cents songwriters and publishers lobbied for.

However there is still great unease with the direction that things are headed on the part of online webcasting and streaming music services as they look into the reality of making payments at these levels. Pandora, NPR and others seeking a new structure want rates to be set as a percentage of total revenue, similar to how royalties are assessed for satellite radio or subscription music services. At the very least, they want a system that will favor webcasters big and small.

Webcasters are required to pay an escalating fee to copyright owners every time they play a song for a listener. This year, for instance, Web radio stations are supposed to pay 14 hundredths of a penny ($.0014) per song streamed, per listener; site operators figure that will cost them about 2.1 cents per user, per hour. That is a figure that most webcasters simply cannot afford to pay, since most sites are advertising supported and do not generate enough revenue to pay the license fees and operate their businesses. Read more from All things Digital here.

We will see what happens in the next month or so as things come to a head.

We Welcome Your Comments


4 replies
  1. Frank Guagenti says:

    Hi Dave,
    To weigh in here for a second. I deal with the Harry Fox Agency. We have an album of traditional blues covers. Some of these tunes go back to 1920. I have gotten a licence to distribute digitally the price of which has been crippling. I don’t know why I have to pay a $15 processing fee per song yearly. I have no problem with the fees for the artist (in this case the artist’s management, the artists are long dead) This is a labor of love for the group to try and bring these old blues tunes to the public. I will not show a profit on the cd, it will wind up costing me Hundreds just to keep it going. There should be a special price for the indie market and for songs over 50yrs old. An album of cover tunes at this point is not feasible for a your average group starting out.

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