Canada sets payment rate for Net music

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TORONTO -- 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% of the price of a song must go back to copyright holders.

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

The Copyright Board announced its ruling on the proposed tariff by CMRRA/SODRAC Inc. (CSI) for the use of any form of music on the Internet. The ruling felt short of what CSI had originally proposed: It had asked for a royalty rate of 15% of the price of a song, or CAN10 cents (US17 cents) per song, whichever is greater. For subscription-based downloads, it had asked for a fee of CAN$1 ($1.17) a month or 10% of the subscription cost.

The 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 CMRRA and SODRAC on a negotiated short-term basis.

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