Previously we reported on some rather unsettling news for web broadcasters in the United States regarding royalties for digital content. There was quite a lot of controversy over the excessive charges that were introduced that were only applicable to internet distribution. The new system introduced increased the rates by between 300% - 1200% of the existing royalty fees. The rates would have effectively shut down every internet radio station in the USA including heavy weights such as AOL and Pandora. I'm happy to report that after almost a year of negotiations and uncertainty that a conclusion has finally been reached that is a lot more reasonable.

The agreement was drafted by the Digital Media Association (DiMA), the National Music Publishers’ Association (NMPA) and the Recording Industry Association of America (RIAA), together with the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA) and submitted to the Copyright Royalty Board to outline the a new flexible percentage revenue system.

Limited download and interactive streaming services will generally pay a mechanical royalty of 10.5 percent of revenue, less any amounts owed for performance royalties. In certain instances, royalty-free promotional streaming is allowed. Outside the scope of the draft regulations, the parties confirmed that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.

Although 10 percent of your revenue might seem like a lot, the other way you can look at it is if you don't make any money you can't pay much in royalties. I can only hope that this new rates system will allow the innovative new systems such as Pandora to continue to flourish and foster new music discovery mechanisms. The Copyright Royalty Board is set to issue their ruling on this agreement on or before October 2nd.