The Canadian government has made its first ruling calling for mandatory payments to rights holders for the use of music on the Internet.

In a landmark move that sets a standard for royalties owed to songwriters, Canada's federal agency, the Canadian Copyright Board, ruled that in the case of permanent downloads, 7.9 percent of the price of a song must go back to copyright holders.

For downloads that require a web subscription, and for on-demand streaming music, the rates are 5.9 and 4.6 percent of the cost of a month's subscription, respectively.

The Canadian Copyright Board announced its ruling on the proposed tariff by CMMRA/SODRAC Inc. (CSI) for the use of any form of music on the Internet on March 16.

The ruling felt short of what CSI had originally proposed. It had asked for a royalty rate of 15 percent of the price of a song, or 10 cents (US 17 cents) per song, whichever is greater. For subscription-based downloads, it had asked for a fee of $1 (US $1.17) a month or 10 percent of the subscription cost.

This ruling ends several years of debate over what qualifies as fair compensation. While Internet services have been operating in Canada for about four years each has been licensed by both CMMRA and SODRAC on a negotiated short term basis.

Quebec's SODRAC and CMRRA in Toronto incorporated CSI in 2002 for the purpose of pursuing through a single entity the tariffs each society files before the Copyright Board. CSI represents approx. 90% of publishers based in Canada.