Today, the National Music Publishers Association ("NMPA"), DiMA, the RIAA and other music publishing groups issued a press release announcing a settlement of certain aspects of the current Copyright Royalty Board proceeding to determine the royalties due under Section 115 of the Copyright Act for the mechanical royalty for the reproduction and distribution of the musical work (i.e. the composition – the words and music of a song). According to the Press Release issued by the parties, this agreement covers interactive streaming and limited-time downloads, setting a royalty of 10.5% of revenue, less any amounts due for performance royalties (to ASCAP, BMI and SESAC, which also reimburse composers of music). While many press reports (at least some of which have already been pulled) have concluded that this is a settlement of the Internet Radio royalties proceeding – that is wrong. The Internet radio royalty proceeding involves Section 114, not Section 115, of the Copyright Act. Section 114 deals with a royalty paid to the performers, not the composers. Section 114 compensates performers and the copyright holders in the performance for the public performance of their works, not for the mechanical royalty for reproduction and distribution covered by Section 115. And Section 114 covers non-interactive streaming – where users cannot dictate the songs that they want to hear – unlike the services, on-demand streams and limited time downloads, involved in this settlement which allow users to select the songs that they want to hear. So don’t believe what you read – the Internet radio royalties are still very much a subject of dispute, and services like Pandora are not yet saved by any sort of settlement.
According to the press release, the one benefit to Internet radio under this agreement is that the parties conclude that there is no royalty due to the music publishers for any copies made in the transmission of non-interactive streaming. The Copyright Office recently began a proceeding to ask if such royalties were due (about which we wrote here). So, even were the Copyright Office to determine that there was a Digital Phonorecord Delivery (a "DPD") made during the Internet radio streaming process, at least for the length of this agreement (assuming that it is approved by the Copyright Royalty Board), no royalty will be assessed. We will write more about this settlement once we have seen the full terms – but wanted to post this notice to alert readers that, contrary to press reports, the Internet Radio proceeding has not been settled.