NMPA Partnership Program

The National Music Publishers' Association ("NMPA") is offering a new membership program - the NMPA Partnership Program (the "Partnership Program") - for all NMPA music publisher members that are not affiliated with The Harry Fox Agency, Inc. ("HFA") ("Non-HFA Affiliates") or that are affiliated with HFA, but do not actively use HFA and, therefore, receive less than one-third (33.33%) of their Mechanical Royalties (defined below) from HFA ("Inactive-HFA Affiliates") ("Non-HFA Affiliates" and "Inactive-HFA Affiliates" are sometimes collectively referred to as "Non-HFA Publishers"). An NMPA publisher receiving at least one-third (33.33%) of its Mechanical Royalties (defined below) from HFA is an active HFA affiliate ("Active HFA Affiliate).

The Partnership Program was recently approved by the NMPA Board of Directors and takes effect immediately. NMPA publisher members who are Active HFA Affiliates will retain all of the benefits of NMPA membership without taking any action. However, a Non-HFA Publisher must join the Partnership Program to participate in the full range of benefits available to NMPA members.

The introduction of the Partnership Program is necessary for two reasons. First, NMPA is funded almost exclusively through the commission process of its wholly owned subsidiary, HFA. Since the mechanical rights market has been severely impacted due to declining sales and piracy, NMPA can no longer afford to fund expensive litigation, including various copyright infringement cases and statutory rate proceedings, relying exclusively on the HFA commission process. Second, with the exception of NMPA's low $100 annual dues, Non-HFA Publishers do not directly or indirectly contribute to the ongoing costs of NMPA litigation or administration, even though those NMPA members benefit from a vast array of NMPA programs and initiatives simply by making their $100 annual member contribution. These benefits include (1) intensive Congressional lobbying on Capitol Hill and with other departments and agencies of the federal government, including the Copyright Office, on all issues relating to the music publishing and copyright industries; (2) leading the songwriting and music publishing community in CRB rate setting proceedings, (3) engaging in music industry outreach to creators, companies, and industries that impact the music publishing industry; (4) creation and maintenance of the NMPA Lyric Site Takedown Program; (5) engaging in public policy initiatives (including supporting and at times opposing legislation and rulemaking impacting the music publishing and copyright industries); (6) filing "friend of the court" amicus briefs in important copyright and music publishing litigation; (7) working as a resource and helping hand to all NMPA members; and (8) promoting and supporting the interests of songwriters, songwriter groups, and public performance societies in the United States and around the world. As a result and after much deliberation, the NMPA Board has approved the adoption and implementation of the NMPA Partnership Program. The Program's goal is to allow NMPA members who are non-HFA publishers to "partner" with NMPA in a manner that enables those publishers to contribute financially to NMPA and all of its programs and initiatives.

The initial rollout of the Partnership Program is being implemented in conjunction with the NMPA program to allocate and distribute settlement funds paid to NMPA in connection with the settlement of the Limewire copyright infringement lawsuit (the "Limewire Settlement Distribution Program"). In particular, NMPA will rely on the publisher submissions and market share analysis performed in connection with the Limewire Settlement Distribution Program to (1) evaluate the active or inactive status of NMPA members that are HFA affiliates and (2) determine the applicable market shares for publishers who join the Partnership Program.

HFA has been designated the "Program Administrator" to administer the initial phase of the Partnership Program and to allocate and distribute the Limewire settlement funds pursuant to the Limewire Settlement Distribution Program rules, as administered in the sole discretion of HFA. NMPA shall be responsible for the ongoing development and administration of the Partnership Program.

To join the Partnership Program, and become eligible to participate in the full range of NMPA benefits and initiatives, including the Limewire Settlement Distribution, a non-HFA publisher must agree to a three-year NMPA supplemental dues commitment, during which time the publisher will pay a pro-rated share of the annual NMPA budget equal to its market share of United States mechanical royalties as determined under the Partnership Program. The first Partnership Program market share supplemental dues commitment evaluation and assessment will be conducted in conjunction with the Limewire Settlement Distribution.

If a Non-HFA publisher opts into the Limewire Distribution Program and is a participant in the Partnership Program, it will have the right to receive its pro-rated market share of the Limewire Settlement Distribution, less its contribution to the 2012 annual NMPA budget. As a result of the payment by the non-HFA publisher of its annual assessment under the Partnership Program, it will receive the same benefits as NMPA members who are Active HFA Affiliates. The annual assessment for 2012, 2013, and 2014 shall be paid by the Non-HFA publisher to NMPA in lieu of the dues paid by all NMPA members that are Active HFA Affiliates.

Full details concerning how to participate in the Limewire Settlement Distribution Program, including how a publisher's market share is determined, are available at www.NMPALimewireSettlement.com.

For NMPA Members who are Non-HFA Publishers considering joining the Partnership Program, the initial Program details follow. Of course, the Partnership Program will remain open after this initial phase of the Program is concluded.

How To Participate:
Non-HFA Publishers interested in participating in the Partnership Program must sign the Limewire Settlement Distribution Program Opt-In Agreement, which can be downloaded at www.NMPALimewireSettlement.com. The non-HFA Publisher must select the option signifying that publisher's agreement to participate in the Partnership Program, pay an annual Assessment Fee (defined below) for each of the next three years (2012, 2013, and 2014) and return the fully completed and executed Opt-In Agreement to the Program Administrator by July 29, 2011. The initial assessment fee shall be deducted from the publisher's Limewire Settlement Distribution share.

A publisher who submits a properly completed Opt-In Form on or before the deadline is a "Participating Publisher" for the Limewire Settlement Distribution.

Market Share Calculation:
The Program Administrator will calculate each Participating Publisher's "Market Share" as follows:

• HFA Income. HFA, as the Program Administrator, will use gross Mechanical Royalties (including the HFA commission, if any), distributed by HFA in the ordinary course of business during the Limewire damages period of July 1, 2007 through June 30, 2010 to each Participating Publisher, whether such publisher is an Active HFA Affiliate, an Inactive HFA Affiliate or Non-HFA Affiliate ("HFA Income").
• Direct Licensing Income. Each Participating Publisher (Active HFA Affiliates and Non-HFA Publishers) may, but is not required to, supplement its HFA Income (which shall include the HFA commission), with evidence of Mechanical Royalties received or recouped, if any, by that Participating Publisher during the Limewire damages period of July 1, 2007 through June 30, 2010 ("Direct Licensing Income"). "Mechanical Royalties" means royalties paid for the right to use copyrighted works to make and distribute phonorecords to the public for private use, including by means of digital phonorecord deliveries, in the United States (including, without limitation, any of its individual states, possessions or territories). A participating publisher must file the required Direct Licensing Income Form with the Program Administrator by August 16, 2011. Participating Publishers who submit a Direct Licensing Income Form agree to make their supporting books and records with respect to the Direct Licensing Income available for inspection by the independent auditor upon request. Company-specific Direct Licensing Income information will be disclosed only as required to administer the Program, the Limewire Settlement Distribution and other NMPA sponsored distribution programs. The Direct Licensing Income Form is available on www.NMPALimewireSettlement.com.
• Independent Auditor. Eisner Amper LLP, an independent auditor ("EisnerAmper"), will review the Direct Licensing Form, select certain income items from the Form on a sample basis, request (directly or through the Program Administrator) evidence of the Mechanical Royalties supporting the selected entries from the Participating Publisher, review the Form and the supporting evidence and report the results of this review on a confidential basis to the Program Administrator. Evidence of Direct Licensing Income may include, but is not limited to, certified financial statements, Mechanical Royalty statements or other reliable evidence of Mechanical Royalties received during the period from July 1, 2007 through June 30, 2010. Participating Publishers must segregate any HFA Income from other Mechanical Royalty income in its submissions. The determination of EisnerAmper of the amount of Direct Licensing Income to be attributed to a Participating Publisher shall be final and binding.
• Market Share Calculation. The Program Administrator shall calculate each Participating Publishers Market Share by dividing each Participating Publisher's combined HFA Income (which shall include the HFA commission), if any, and Direct Licensing Income, if any, by the total combined HFA Income and Direct Licensing Income of all Participating Publishers. The determination of Market Share by the Program Administrator shall be final and binding.

Active HFA Affiliate Determination.
If an HFA affiliate opts into the Limewire settlement, submits the Direct Licensing Income Form and its HFA Income is not at least one-third (33.33%) of its combined HFA Income and Direct Licensing Income, the Program Administrator will notify the Participating Publisher that it is not an Active HFA Affiliate and such publisher will be provided the opportunity to opt into the NMPA Partnership Program. The determination of whether a publisher is an Active HFA Affiliate by the Program Administrator shall be final and binding.

Assessment Fee
The annual "Assessment Fee" for a Non-HFA or Inactive HFA Affiliate shall equal its Market Share multiplied by the annual or interim NMPA budget approved by the NMPA Board of Directors for each of the years 2012, 2013, and 2014, as applicable (the "Program Period"). The Market Share used to calculate the Assessment Fee may be adjusted with updated, current mechanical licensing data for subsequent assessments and/or distribution. NMPA retains the right, in its discretion, and only upon request of the NMPA member, to adjust the market shares of Participating Publishers during the Program Period if there has been a significant or material change warranting readjustment. Notwithstanding the foregoing and for the purposes of the Program only, the NMPA budget for 2012 shall be $6.9 million. The initial Assessment Fee for Non-HFA Publishers shall apply in lieu of their NMPA dues for 2012. The next Assessment Fee shall not be calculated and invoiced until the beginning of 2013.

Notification of Market Share, 2012 Assessment Fee and Limewire Distribution
Once the Program Administrator has finalized its calculations, each Participating Publisher will receive a notice of its calculated Market Share, Assessment Fee due for 2012 (if applicable) and the Limewire Settlement Distribution. For Partnership Program participants, each participating publisher will receive its Limewire Settlement Distribution minus its Assessment Fee due to be paid for 2012. The Program Administrator will pay the Assessment Fee directly to NMPA.

Important Partnership Program Dates

• Final day to return Program Opt-In Agreement: July 29, 2011
• Final day to provide Direct Licensing Income Form for July 2007- June 2010: September 2, 2011
• Notification of Market Share, Assessment Fee and distribution of Limewire settlement allocation : on or about November 15, 2011

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It is vitally important that NMPA be able to continue its important work on behalf of the songwriting and music publishing community. These are challenging times for songwriters and music publishers, and the Partnership Program is an innovative and mutually beneficial way to meet those challenges and to ensure that NMPA continues its role as the pre-eminent music trade association representing songwriters and music publishers in the United States.

Additionally, the Partnership Program is designed to provide maximum benefit and equity to participating Non-HFA Publishers, Active HFA Affiliates, and the NMPA. The Partnership Program will enable NMPA to continue its work representing songwriters and music publishers, will ensure that all music publishers contribute their fair share to support that work. If you are not affiliated with HFA or are affiliated but do not actively use HFA, we ask that you seriously consider joining the NMPA Partnership Program.

Please contact the Program Administrator at 1-888-584-7639 with any questions regarding the NMPA Limewire Settlement Distribution Program or the Partnership Program.