Music Business Journal: Mechanicals Dues and RightsFlow

Trish Hosein
November 7, 2010

The digital age of music has introduced new legal forms of music consumption that do not correlate clearly with the previous licensing laws. These old laws were created at a time when the recorded music industry revolved around physical sales and traditional radio play. They do not address, however, services like Rhapsody, where streaming audio is not public performance, nor is it a transaction of ownership. In some cases, these gray areas have allowed royalties to slip through the cracks, never reaching the hands of the rightful copyright owner.

Music Collections Redefined

Over the last five years, the Copyright Royalty Board has attempted to set rates and regulations to clarify the dispute over how new media royalties and licensing should be handled. In 2006, after a lengthy debate between webcasters and copyright owners, the board ruled that non-interactive webcasts would pay royalties on a per listener basis, while ringtones would have a hefty statutory rate of 24 cents. A decision on royalty compensation regarding interactive streaming was issued in 2008, which paid royalties on a per-play percentage of a blanket royalty rate. These steps were integral in the birth of the independent, non-profit performance rights organization, SoundExchange. The organization is responsible for collecting digital royalties from non-interactive streaming, internet radio, cable TV and music channels and distributing these royalties to artists and master recording owners.

In addition, the digital age has created changes in the ways that artists go about obtaining mechanical licenses. Organizations like the Harry Fox Agency have begun to enter the online forum with services like Songfile, which radically eases the process of obtaining mechanical licenses. With Songfile, artists can shop through HFA's entire database of publishers, select a song, and obtain the license in minutes from the comfort of their own homes....

Read more about mechanicals dues and RightsFlow in Berklee's Music Business Journal.