Label's trade body the British Phonographic Industry and some of the United Kingdom's leading online music services have today (June 29) referred to the country's Copyright Tribunal in their dispute w

Label's trade body the British Phonographic Industry and some of the United Kingdom's leading online music services have today (June 29) referred to the country's Copyright Tribunal in their dispute with music publishers over online licensing terms.

The BPI and seven online services are objecting to the royalty rate British authors and publishers' collecting society MCPS-PRS Alliance is planning to charge for online downloads of musical works on the Internet and on wireless devices.

The seven online services are AOL, Apple iTunes, MusicNet, Napster, RealNetworks, Sony Connect and Yahoo! They contend that there is a discrepancy between the royalty fees charged by the Alliance for physical, broadcast and online products.

Mechanical royalties on physical products stand at 6.5% of retail price (or 8.5% of the published wholesale price); broadcasting rates range from 3%-5.25% of radio station's net advertising revenues.

The BPI and the online services object to the Alliance's online tariff proposals, which would set the rate for online usage of music at a rate of 12% of gross retail revenues. This rate is subject to a temporary discount to 8%.

They also contend that the Alliance's rates do not take into considerations the diversity of the business models applicable for online services. It also applies to services offering Webcasts.

The BPI said the filings to the Copyright Tribunal follow several years of negotiations between the Alliance and the BPI and online music services. However, they said they had not been able to "achieve acceptable terms." It is understood that labels and online services were pushing for a rate closer to that of physical products.

"The licence that the Alliance is trying to impose for online music is unreasonable and unsustainable," says BPI general counsel Geoff Taylor. "It is charging a royalty rate on a download that is double the rate it charges for a song on a CD."

In a statement, the MCPS-PRS Alliance said that it "regrets" this action. It added it had made proposals in order to find agreement on licensing terms "without the expense of tribunal proceedings," but without success.

MCPS-PRS Alliance Group CEO Adam Singer said the tribunal reference "could have been avoided." He added, "Industry observers must be baffled by record companies taking the publishing divisions of their own companies through a tribunal procedure -- spending millions that neither side can afford. This tribunal reference does tremendous damage to the industry as a whole, not least in the eyes of government. For a creative industry this demonstrates a complete lack of imagination."

The MCPS-PRS Alliance said it launched in 2002 the Joint Online Licence and since then has made agreements with more than 100 music service providers to its terms.

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