The RIAA announced a preliminary deal with music publishers Tuesday, paving the way for major labels to launch Pressplay and MusicNet services that will essentially rent music to fans on the Web.
Though a final royalty structure hasn't been worked out, the Recording Industry Association of America will pay the Harry Fox Agency an advance of $1 million against future royalties, according to a statement issued by the RIAA. The Harry Fox Agency is the copyright licensing arm of the National Music Publishers' Association and represents 27,000 music publishers, who in turn represent more than 160,000 songwriters, the statement said.
If the two sides can't determine a royalty rate in the next two years, the RIAA will pay HFA monthly advances equaling $750,000 a year until an agreement is reached. Once rates are determined, royalties will be paid retroactively from the time the music becomes available on the Web.
The NMPA and HFA sued Napster last year for making copyrighted material available to users without paying songwriting royalties. The two sides settled last month, with Napster agreeing to pay $26 million in damages to publishers and songwriters. The company would also pay $10 million in advance of future royalties (see "Napster, Publishers Reach Preliminary Royalties Agreement").
The agreement means that Pressplay and MusicNet will be able to sell users limited access to music, in the form of on-demand streaming where a user can click to hear a song, but not download it and limited downloads that stop working after a period of time or after they've been played a certain number of times.
For instance, when MusicNet a joint venture between Warner Music Group, BMG Entertainment and EMI Recorded Music launches later this year via partners AOL and RealNetworks, it plans to offer monthly subscriptions, which allow users to download a set number of songs for a 30-day period. Pressplay, a joint venture between Sony Music and Universal Music, will likely offer similarly limited access to major-label music.
Harry Fox represents about 90 percent of songs published in the United States, so Pressplay and MusicNet would still have to negotiate royalty rates with songwriters and publishers that aren't represented by the firm.