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Music Royalties Stay Steady--With One Big Change

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There's been plenty of debate about whether the century-old music royalty system should be entirely overhauled to keep up with the realities of digital distribution.

But despite demands for higher royalty payments for downloads (15 cents per song), the Copyright Royalty Board kept the royalty calculation the same for record companies; 9.1 cents per song sold, whether those sales are digital downloads or on compact discs.

Appleand other online music stores came out to oppose that higher 15 cent-per-song royalty rate, so this is a win for Apple and the like, and another example of the music labels are having a hard time eking out more revenues in this new landscape. The royalty rate usually increases over time, but this is the same rate that was set in 2006, the longest time the rate has been static since 2006.

The question is whether royalties should be calculated as a number of cents per song--which represents a different percent of revenues for digital downloads and CD sales--or simply as a percentage of revenue. Many argue that calculating a percentage of revenue is more fair, and affords greater flexibility.

    • Copyright board leaves royalty rate unchanged

The big change: The Copyright Royalty Board set a royalty rate for ringtones of 24 cents, more than music publishers or record labels had asked for.

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