Labels seek lower royalty rate

RIAA to copyright judges: Rules are 'out of whack'

Record labels are asking a panel of copyright judges to lower the rate they pay music publishers and songwriters for the use of the lyrics and melodies with which they create sound recordings.

The current rate is out of touch with reality, the RIAA argued for the labels in papers filed with the Copyright Royalty Judges. The rate hasn't been adjusted by the government since 1981. Meanwhile, labels, songwriters and music publishers have been able to make a deal.

The music industry has undergone such fundamental changes, the RIAA contends, that it's time for the government to step in.

"While record companies and music publishers were able to agree on royalty rates during that 25-year period, the assumptions on which those decisions were based have changed beyond recognition," the RIAA said.

During the period when piracy was devastating the record industry, the RIAA argues, profits for publishers rose as revenue generated from ringtones and other innovative services grew. Record industry executives said there was nothing strange about seeking a rate change that would pay less to the people who write the music.

"Mechanical royalties currently are out of whack with historical and international rates," RIAA executive vp and general counsel Steven Marks said. "We hope the judges will restore the proper balance by reducing the rate and moving to a more flexible percentage rate structure so that record companies can continue to create the sound recordings that drive revenues for music publishers."
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