The Recording Industry Assn. of America is getting set to appeal two aspects of the Copyright Royalty Judges final determinations for mechanical and digital phonorecord delivery rates and terms, sources say.

According to sources, the RIAA will file a notice that it plans to appeal:
- Late fees imposed on labels for royalty payments to publishers.
- The 24 cent royalty rate set for master ringtones.

The late fees were incorporated into the Copyright Board Oct. 2 decision on mechancial and digital royalties, which, among other things, gave publishers the ability to impose a 1.5% late fee if labels don't pay mechanical within 30 days. That means if labels are late every month, late fees can total as much as 18% of annual royalty payments.

The RIAA and the National Music Publishers Assn. have been negotiating a settlement on the late fees, but so far those talks haven't produced an agreement. The labels are objecting to the late fees because often records, in particular albums in the urban genre, are released before the songwriter's split has been worked out.

When the Copyright Royalty Board first issued its ruling, the RIAA requested the CRB review the late fees issue, and the Copyright Royalty Judges affirmed its ruling. The CRB subsequently filed its final determination on Jan. 26, which meant interested parties had 30 days to appeal that decision.

"There is no reason to pay late, if you know who to pay," says one label executive. "But the labels say the publishers are better positioned to resolve the splits while the publishers feel that the labels should be responsible for resolving the split."

"We have tried to come up with a way to pay royalties into a fund until disputed splits are involved," but that hasn't worked out. That executive says, there also seems to be an issue about when the late fees will be attached. Does the 30 days start counting from the date of the sale or from the date that the digital retailer and other digital service providers makes payment to labels?

As for the master ringtones, labels feel that the 24 cent rate doesn't allow for the labels to scale pricing according to demand.

The RIAA and the NMPA were unavailable to comment.