Copyright Royalty Board rejects call to hike download royalties

A panel of US federal judges has rejected calls by music publishers to raise the royalty rates on music downloads. Digital music sellers like Apple and Amazon.com will continue to pay publishers nine cents per song downloaded.

The Copyright Royalty Board in Washington DC, a panel of three judges appointed by the Library of Congress, opted to retain the status quo and turned down a request by the National Music Publishers Association to increase royalties from nine cents to 15 cents on songs bought online.

Music publishers had pushed for a 15 cent 'mechanical' royalty from downloads and CDs, while digital music services wanted it cut to 4.8 cents. The ruling keeps royalties on CDs, downloads and online streaming services broadly unchanged.

It applies strictly to mechanical royalties, which are paid to the songwriters and publishers of music, not the performers. The royalty is paid by the entity licensing the music, which varies, depending on the format of the recording.

For the first time the judges also set for a mechanical royalty rate for master tones, or ring tones made from a snippet of music from a full recording, at 24 cents, and the right to seek a 1.5% late fee, calculated month, if labels or digital retailers fail to pay them promptly. Copyright holders had previously negotiated royalty payments with users.

Apple welcomed the ruling. In testimony submitted to the CRB 18 months ago the company had said that it would  "most likely not" continue to operate its iTunes Store "if it were no longer possible to do so profitably," according to reports.

Jonathan Potter, executive director of the Digital Media Association, said he was pleased with the decision. "Keeping rates where they are will help digital services and retailers continue to innovate and grow for the next several years, which will benefit songwriters, artists, labels and publishers," he said.

The Recording Industry Association of America, which represents record labels, said it was pleased that the rate was frozen for the first time since 1977, meaning that if song prices increase, royalties will make up a falling percentage of the companies' costs.

"No party got everything it wanted, yet at the end of the day, the certainty provided by this ruling is beneficial," said Mitch Bainwol, chief executive of the RIAA.

Involved parties will have 15 days to request a rehearing, while the Register of Copyrights will have 60 days to review the decision for legal error.

By the end of the latter period, the Librarian of Congress will publish the determination in the Federal Register and once the ruling appears there, unhappy parties have 30 days to file an appeal.