The Harry Fox Agency, Inc. said its 2008 royalty collections from all sources was $307.1 million, a 22% decline from the $393.5 million collected in 2007.

"2008 was another tough year for the music industry, and HFA was no exception," HFA President & CEO Gary Churgin said in a statement. "The decline in the market had slowed in 2007, but in 2008, as the overall economy suffered, we saw the effects on the music sector accelerate. The retail closings and reductions of floorspace dedicated to music sales will continue to reverberate through the mechanical licensing market in 2009. The growth of digital sales, while still robust, is also slowing, so we do not expect digital to offset the losses of CD sales any time soon."

While revenue is down licensing is up, thanks to all the new digital formats such as ringtones, individual songs, digital bundles; and the multiple licenses needed for each song and album, depending on whether each work is a permanent download, an interactive stream, or a limited download.

Consequently, in 2008, HFA issued over 2.44 million mechanical licenses in the year, 62% more than the more than 1.51 million issued in 2007. But nearly 84%, or 2.05 million, were for digital formats. Of that latter number, 530,000 were for permanent digital downloads of singles and albums. HFA said that the 2.05 million licenses for the digital format was nearly one million more than what was issued for that format in 2007, but it didn't present 2007 comparison data for the permanent digital downloads of singles and albums in this year's press release for year-end numbers, nor in last year's press release

But in an interview Churgin said that last year, permanent digital downloads, also referred to as a digital phonorecord delivery, last year generated $41 million in mechanical royalty collections, while this year it generated $51 million. "That means royalties from permanent digital downloads went from 11% to almost 18% of HFA's regular mechanical collections," Churgin said.

Meanwhile, mechanical royalties collected for CDs and other physical formats as well for print and online licensing of lyrics and tablature were down $75.5 million from the prior year, from $320.2 million in 2007 to $234.7 million in the current year."

While royalty collections for retroactive activity for interactive streaming and limited downloads that occurred at subscription services and ad-supported models from 2001-2008 and for current activity will occur this year for the first time, Churgin said in an interview that he doesn't expect to see significant mechanical royalties from that channel until 2010.

"The focus of 2009 for HFA will be implementing the new schedule of mechanical royalty rates from the Copyright Royalty Board, which set compulsory rates for interactive streams, limited downloads and ringtones, and continuing to find new opportunities to add to our clients' and HFA's revenue beyond the traditional mechanical, Churgin said in a statement.

In another breakout of total collections, $20.8 million came from settlements of royalty Compliance examinations. While that's down from the $21.1 million collected last year due to royalty compliance examinations, HFA is focusing on collecting monies on a more current basis, which requires a shorter time period between examinations, that results in smaller individual settlements. Last year 19 examinations were concluded while 46 are still in progress.

Overall, with the addition of last year's activity, this brings the total number of licenses under HFA's administration to over 16.7 million. The company represents over 37,000 publishing clients, with nearly 2.3 million songs available for licensing. The company also said that it added 484 new licensees to its bulk permanent download licensing program, bringing the total number of companies participating in that program to nearly 1,300.

HFA takes a 7.75% commission on royalties with 1% of that being used to find the NMPA's efforts on behalf of the music publishing community before the Copyright Royalty Board. That means the organization pays out more than 92 cents on every dollar collected straight to its publishing clients. The HFA press release said that ratio was better than any other rights organization in North America, if not the world.