Record industry reaches agreement on online distribution
Associated Press
NEW YORK — The recording industry has reached an agreement with songwriters and music publishers over licensing music for distribution over the Internet.
The agreement announced yesterday helps clear the way for two industry-backed music distribution services to launch later this year. Online music site Napster reached its own agreement with the music publishers last month.
The deal allows the members of the Recording Industry Association of America, which includes all five major labels, to license for online use any song from the Harry Fox Agency, the largest in the industry.
Harry Fox Agency, a subsidiary of the National Music Publishers' Association, represents 27,000 music publishers who in turn represent the interests of more than 160,000 songwriters.
The licenses will cover both the streaming of music as well as limited downloads of music files, meaning ones that can be played only for a limited time or for a limited number of playbacks.
The rates have yet to be determined, but the RIAA will pay the agency an advance of $1 million as part of the arrangement. If the two sides do not settle on a rate during the next two years, the industry will pay monthly advances totaling $750,000 per year until a rate is set.
"This agreement removes a major legal roadblock for the new online subscription services," RIAA president and CEO Hilary Rosen said in a statement. "The coming subscription services may now begin licensing thousands of musical works immediately."
The music industry is hoping to launch two online music subscription services later this year. Sony and Universal have teamed up to form pressplay, and the other three major labels, Warner, EMI and Bertelsmann's BMG, are backing the rival service MusicNet.
The agreement means publishers and the recording industry "are now on the same page about how the digital pie will be split," said P.J. McNealy, an analyst for Gartner G2. "What this means for consumers is that we're just one big step closer to the services becoming a reality."
But McNealy said other hurdles remain, centering on technology. Chief among them is a lack of compatibility between MusicNet, built around coding software supplied by RealNetworks, and Pressplay, which relies on a Microsoft-developed standard, he said.
