Apple, mobile firms agree deal on music royalties

By Kate Holton

LONDON: Apple's iTunes and mobile operators including Vodafone on Thursday agreed on rates to pay song writers and music publishers for digital downloads in Britain to partly resolve a dispute.

Under terms of the deal, Apple Computer Inc. and four mobile operators will pay 8 percent of gross revenue, excluding VAT, for all music sold digitally excluding ringtones. A lower 6.5 percent rate was agreed for non-on-demand services such as streaming.

The deal was announced in a joint statement by the trade group representing record labels, BPI, and MCPS-PRS Alliance, which fixes and collects royalties on behalf of the composers, song writers and music publishers.

"All parties to the settlement welcome this agreement, which will help drive the on-going growth of the legitimate digital music market," the statement said.

Mobile operators O2, France Telecom's Orange and Deutsche Telekom's T-Mobile are also part of the agreement.

Under a previous deal, the law stated that the song writers and publishers must receive 12 percent but for the last four years this had been temporarily reduced to eight percent. Thursday's ruling made that reduction permanent.

"This is a balanced voluntary settlement in which both sides can draw not just comfort from, but excitement that they can go forward and build a business together based on an understanding that will work to the benefit of all," BPI Chairman Peter Jamieson told Reuters.

Also included in the deal is the agreement of a minimum price rate which ensures the music creators would still receive a rate, even if the price of music drops significantly.

"We wanted to ensure that music writers and composers would get an absolute minimum amount of money if prices were to come down dramatically," Jamieson said.

EMI Group Chairman Eric Nicoli said the royalty deal would clear the way to help further develop digital sales, which are slowly replacing the lost revenue from declining sales of CDs.

"Our collective focus must be on connecting our artists and consumers in every imaginable legal way and to returning our industry to growth," he said.

Illegal file-sharing and piracy cut deeply into CD sales, but music publishers have been partly shielded because they are paid not only when CDs or downloads are sold, but also when songs are sung live or used in films and TV shows.

Jamieson and Adam Singer, the Alliance's outgoing Chief Executive, told Reuters there were still some small unresolved issues regarding the definition of revenue and these would be examined at a later date in November.

"In a nutshell we're very happy about a voluntary settlement to go forward that is for both our benefits," Singer said.

(Additional reporting by Jeffrey Goldfarb)