Press Releases & Advisories
02 October 2008
W&G Successfully Opposes Increase in Mechanical Royalty Rates
Wiltshire & Grannis LLP won an important outcome for Internet music companies when the Copyright Royalty Board issued a decision on October 2, 2008 freezing the current 9.1 cent mechanical royalty rate for digital downloads for the next five years.
The “mechanical royalty” is the license fee paid to songwriters and music publishers for the reproduction and distribution of their works. For more than 25 years since the last litigated proceeding, the rate has increased each year for inflation. Songwriters and publishers argued for a 60% increase in the penny rate, higher rates for digital compared to traditional physical media such as CDs, and continued upward inflation adjustments.
Digital music companies represented by WG argued against discriminatory and higher costs. The Copyright Royalty Board agreed that digital music companies through their investments play an important role in expanding the music marketplace through the contributions of new media and technology. In light of this, unfairly increasing the costs of distributing music digitally made no sense. As a result of the decision, songwriters and consumers will benefit from greater investment in innovation and continued growth in the digital music industry.
Rates and terms for subscription digital music services (conditional downloads and interactive streaming) were settled by the parties and published in the Federal Register on October 1, 2008. This proceeding represents an important recognition of the role of digital media companies in the development and future of the music industry. WG represented the Digital Media Association (“DiMA”) and DiMA member companies including Apple, MediaNet, Napster, and RealNetworks.
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