The Recording Industry Association of Malaysia (RIM) forecasts digital revenue to grow from 20 million Malaysian ringgits ($5.5 million) this year to 30 million ringgits ($8.29 million) in 2009. It follows the signing of a historic memorandum of understanding between record labels (RIM members) and music publishers together with the Music Authors' Copyright Protection agency (MACP).

The increased revenue from telcos and aggregators would benefit both the record companies and the publishers. RIM collects for record labels, the MACP for publishers.

Under the terms of the new agreement, music publishers receive a fixed 8% of wholesale price for works licensed to digital platforms. Unlike the European model, however, the Malaysian fixed rate deal for music publishers covers future new media formats. In Japan, the rate for digital platforms, fixed at 7% of wholesale, was regulated six years ago.

"It is a pro-business deal that benefits all business partners," says Sandy Monteiro, RIM's chairman. "Within the next three years, we expect to close the gap between physical and new media sales."

Previously, music publishers negotiated deals individually, but talks often broke down over the desired rate; deals that were agreed ranged between 6% and 12% of wholesale price. As a result of the new standard fixed rate, RIM expects more digital licensing deals to be secured for its members, with a resulting overall increase in revenue for the industry.

"This collective agreement with music publishers enables the music industry to respond faster to the growing needs of music consumers," adds Monteiro. "Content aggregators, internet providers, and telcos can now advance new media sales without having to negotiate the rate for each new deal."

As a goodwill gesture, RIM made an advance payment of 1 million ringgits ($276,200) to the MACP for publishing royalties on RIM members’ digital sales up to the end of this year.

"After five years of intense negotiations, we're already starting to see tangible benefits of the fixed rate deal," confirms Tan Ngiap Foo, RIM's CEO. "Hopefully, the Malaysian model will pave the path for other territories in adopting a similar model."

Music publishers receive 6% of wholesale price for physical formats. Total physical format sales last year were 69 million ringgits ($19.1 million) and sales are expected to drop to 60 million ringgits ($16.6 million) this year, according to RIM.