Six music groups charged the Digital Media Assn. with negotiating in bad faith over online music licensing issues at the center of congressional subcommittee discussions.


NEW YORK -- Six music groups charged the Digital Media Assn. with negotiating in bad faith over online music licensing issues at the center of congressional subcommittee discussions.

In a letter faxed Aug. 25 to DiMA executive director Jonathan Potter, the National Music Publishers Assn. and others blamed a breakdown in negotiations on DiMA after it failed to make a "serious financial proposal" for online licensing and its members' key decision makers failed to attend.

The letter noted that at the most recent negotiations on Aug. 9 and Aug. 16, the music groups were ready to make a deal by having decision makers present. Four of the five music publishing companies that comprise the NMPA negotiating committee and the top business affairs person for the fifth company were present. They were joined by executives of the NMPA, the Harry Fox Agency, ASCAP, BMI, the Songwriters Guild of America and the Nashville Songwriters Assn. International.

"We were not only disappointed that several of the most significant DIMA companies were not represented, but that no CEO of any DiMA member attended," the letter said.

They also charged that DiMA only offered a rate of 5% of revenue to cover mechanical and performance rights for online subscription services -- later increasing the offer to 6.9%. This amount is far less than the rate of 16-2/3% of gross revenue proposed by the music groups, who say that this amount reflects market value.

In a written response Aug. 26, DiMA countered that songwriters and publishers are asking for "a raise" that "far exceeds any songwriter/publisher royalties ever paid by broadcast radio, Internet radio or traditional sound recording companies."

The group wrote that it is "incomprehensible to suggest that the fledgling online music industry is acting in bad faith merely because we refuse to pay double and triple royalties as the price for legislative modernization that will help all segments of the music industry."

There is no scheduled date for further discussions, but the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property is expected to continue its efforts to modernize the mechanical license provisions of the Copyright Act.


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