Press Release

Songwriters and Music Publishers Reach Landmark Accord with Record Industry To License Music Subscription Services On the Internet.

WASHINGTON - The National Music Publishers' Association (NMPA), The Harry Fox Agency, Inc. (HFA) and the Recording Industry Association of America (RIAA) announced today that they have come to a breakthrough agreement on the licensing of musical works for new subscription services on the Internet.

"This agreement removes a major legal roadblock for the new on-line subscription services," said RIAA President and CEO, Hilary Rosen. "The coming subscription services may now begin licensing thousands of musical works immediately. For consumers, this will essentially mean they will have access to more and better on-line music options, sooner."

"This is good news for songwriters and music publishers who want to promote this exciting new outlet for their music and for the Internet companies poised to make it happen," said Irwin Z. Robinson, Chairman, NMPA, HFA and the Famous Music Publishing Companies.

"This landmark agreement confirms that the streaming of music on demand requires a mechanical license under the U.S. Copyright Act," said Edward P. Murphy, President & CEO, NMPA. "We are pleased to have reached a consensus with the record industry on this key issue, enabling us to move forward on the matter of determining what the royalty rate for such streaming will be."

Under the agreement, the RIAA - and all its member labels and their licensees, including the new on-line subscription services - will immediately have access to every musical work authorized to be licensed by the HFA, the largest agency in the industry for licensing reproductions and distributions of musical works. HFA will issue licenses for subscription services offering on-demand streaming and limited downloads (i.e. downloads that can be played only for a limited period of time or number of times).

Once rates are determined, royalties will be payable on a retroactive basis from the commencement of services. Pending that determination, the RIAA will pay HFA an advance of $1 million toward the royalties to be determined. If the two sides do not settle on a rate during the next two years, the recording industry will pay monthly advances totaling $750,000 per year until a rate is set.

"I am thrilled with the agreement. The HFA stands ready to fulfill the licensing, collection and all operational aspects of this Agreement," said Gary L. Churgin, President & CEO, HFA. "This breakthrough in the licensing of music on the Internet demonstrates the ability of the songwriting and music publishing community and the record industry to achieve the right balance that benefits consumers as well as the entire music industry."

Under the agreement, the licensing process will be expedited, allowing for "bulk licensing" of musical works. The agreement also confirms the parties' mutual understanding of the relevant copyright law - namely that a mechanical license is required for these types of subscription services, that the compulsory licensing provisions apply to such services, and that the license covers the server copy as well as transient and buffer copies.

"This agreement will do wonders for music lovers and the on-line music marketplace," said RIAA General Counsel and Senior Executive Vice President, Cary Sherman. "It confirms that the existing compulsory licensing system is available for new subscription service business models; that the mechanical license covers everything from the server copy through to the user's PC; and that the licensing process can be quick, simple and efficient."

Publishers represented by HFA will have the opportunity to opt out of the licensing agreement if they so elect. Likewise, any subscription service or record company may deal directly with HFA or individual music publishers, if they prefer.

The Recording Industry Association of America represents the interests of the over 600 record companies - including Universal, Warner, Sony, BMG and EMI. RIAA members create, manufacture and/or distribute approximately 90% of all legitimate sound recordings produced and sold in the United States.

The National Music Publishers' Association, Inc., founded in 1917, works to protect and advance the interests of the music publishing industry. With over 800 members, the NMPA represents the most important and influential music publishing firms throughout the United States.

The Harry Fox Agency, Inc., the licensing subsidiary of NMPA, provides an information source, clearing house and monitoring service for licensing musical copyrights, and acts as licensing agent for more than 27,000 music publisher principals, who in turn represent the interests of more than 160,000 songwriters.