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Impasse Over Web Song Royalties

August 27, 2005|From Bloomberg News

A group of Internet music subscription service providers including RealNetworks Inc. and Yahoo Inc. can't agree with songwriters on royalty payments for tunes streamed over the Web, leaving composers and songwriters unpaid.

Talks on a payment rate broke down Aug. 16, with a group representing service providers offering 6.9% of total sales and songwriter groups asking for 14%, said a songwriters' representative. Six songwriters groups Thursday accused the providers of bad-faith negotiating, and a providers' representative suggested that the songwriters were trying to provoke congressional intervention.

The services, which sell consumers the right to play but not own songs, can still operate under a 2001 pact that calls for them to pay advance royalties into accounts for songwriters and composers until a rate is set. Until then, songwriters will go without compensation, as no formula has been set that determines how much each should receive from the accounts.

"We're not interested in shutting anyone down. We just want a fair price for the songwriter," said David Israelite, chief executive of the National Music Publishers Assn., which represents the writers.

Said Jonathan Potter, the providers association's executive director, "Everyone wants the songwriters to get paid.... They are trying to exploit their business opportunity to get double and triple the royalties they have historically gotten, and we're not going to go there."

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