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Music Publishers, Recording Industry in Web Pact

The National Music Publishers’ Association, The Harry Fox Agency Inc. and the Recording Industry Association of America have reached a “breakthrough agreement” on the licensing of musical works for new subscription services on the Internet, the RIAA said on Tuesday.

“This agreement removes a major legal roadblock for the new online subscription services,” Hilary Rosen, RIAA’s president and chief executive officer, said in a statement.

“The coming subscription services may now begin licensing thousands of musical works immediately. For consumers, this will essentially mean they will have access to more and better on-line music options, sooner.”

The RIAA said that under the agreement, it and all its member labels and their licensees, including the new online subscription services, will immediately have access to every musical work authorized to be licensed by the Harry Fox Agency, the largest agency in the industry for licensing reproductions and distributions of musical works. HFA will issue licenses for subscription services offering on-demand streaming and limited downloads.

Once rates are determined, royalties will be payable on a retroactive basis from the start of services. Pending that determination, the RIAA will pay HFA an advance of $1 million toward the royalties to be determined. If the two groups do not settle on a rate during the next two years, the recording industry will pay monthly advances totaling $750,000 per year until a rate is set.

Publishers represented by HFA will have the opportunity to opt out of the licensing agreement if they choose to. Also, if they prefer, subscription services or record companies may deal directly with HFA or individual music publishers.

The RIAA represents the interests of the over 600 record companies – including Universal, Warner, Sony, BMG and EMI.

Universal is a unit of Vivendi Universal, Warner is part of AOL Time Warner Inc., and BMG is a unit of Bertelsmann AG.

The National Music Publishers’ Association works to protect and advance the interests of the music publishing industry and the Harry Fox Agency is the licensing subsidiary of NMPA.

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