U.K.'s MCPS, BPI Settle On DVD Royalty Rate

The British Phonographic Industry (BPI) and Mechanical-Copyright Protection Society (MCPS) have reached agreement on the royalty rate for music DVDs.

The British Phonographic Industry (BPI) and Mechanical-Copyright Protection Society (MCPS) have reached agreement on the royalty rate for music DVDs.

The new pact relates to the DVD1 licensing system, launched May 1, 2003, which allows producers to clear both the mechanical and synchronization rights needed to include works by MCPS members on DVD-Videos.

Under the new two-year agreement, the rate for standard DVD is set at 6.25% for music products, 7.25% for mixed audio and audio-visual product and 8.5% for audio products with limited audio-visual tracks. All rates are based on a percentage of the PPD, or published price to dealer.

These royalty rates are inclusive of both the mechanical and synchronization rights, which, except in the case of live classical recordings, will not need to be paid for separately.

As a result of the agreement, announced today, the industry bodies have averted a potentially costly hearing with the country's Copyright Tribunal. The tribunal has competence to set copyright rates in case an agreement is not found between the two parties.

The MCPS had previously set a DVD royalty rate of 10% of PPD, arguing that its 15,000 members had not been paid for use of their works on the format since its introduction some three years prior.

The BPI in April 2003 referred the MCPS' system to the Copyright Tribunal over what it described at the time as "inappropriate" terms offered by the collecting society.

In line with the new agreement, the BPI has subsequently withdrawn its reference to the tribunal.

BPI chairman Peter Jamieson described the agreement as “good news” for record companies who produce music DVDs. “It provides commercial certainty on licensing terms for new releases and allows producers to settle past obligations on improved terms,” he says. “It will help encourage further growth in the exciting music DVD sector and other new audio formats.”

Sandra Cox, executive director of MCPS, commented: "I'm pleased that the industry has been able to reach this agreement which provides a framework for composers, songwriters and music publishers to now receive royalties for the use of their works and which maintains a simple royalty basis with no pro-rating for non-music content."

Cox adds that both parties have committed to ongoing talks with a view to setting DVD licensing conditions from 2006 onwards.

In addition, a formula for licensing DVD music products released prior to January 1, 2004 has also been agreed. Music DVDs -- except those that are predominantly audio-only -- will be licensed at 5.75% of PPD, given that producers submit music details and sales reports to MCPS by July 30, 2004.

MCPS says it will shortly contact all DVD producers with full details of the new pact.
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