Innovation Asset Blog

Royalty settlement signals change for music industry

The advent of digital marketplaces and free online streaming services has been a point of contention for the music industry in recent years, with regulators struggling to ensure equity for content producers. In what is being described as a landmark settlement, the Recording Industry Association of America, the National Music Publishers' Association and the Digital Media Association recently came together with the Copyright Royalty Board to set forth new standards governing the revenue generated by innovative new music delivery models.

"Today’s agreement is not only an important show of industry cooperation, but a testament to the value of the creative content being provided to consumers," NMPA president David Israelite explained. "This agreement represents the culmination of months of discussions among the music industry, digital service providers and technology companies, and will provide more consumer choice with respect to when and how to access music while ensuring songwriters and music publishers continue to thrive in the digital age."

The new agreement addresses several business models, including paid digital locker services such as iTunes, music ringtones and mixed media bundles coming through CD purchases.

According to Billboard, music publishers will receive a mechanical royalty rate of 12 percent of revenue, 20 percent of total content cost or 17 cents per subscriber - whichever represents the largest figure - when distributing their media through iTunes and similar platforms.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.