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Universal Music and Major Publishing Group Reach Agreement Over Vevo, YouTube Royalties

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The milestone deal, which covers North America and is retroactive to 2008, institutes a new model that allows songwriters and music publishers to share in revenues for music clips played online.

Less than a week after the National Music Publishers' Association annual meeting, when president and CEO David Israelite said the organization was chasing the major labels to pay indie music publishers for videos streamed on VEVO and Youtube, the NMPA has announced its first deal with a major, the Universal Music Group.

The NMPA termed the agreement, which covers North America, a groundbreaking model licensing deal because it will allow songwriters and music publishers to share in revenue from music videos. Up until now, while Youtube and VEVO were making money on their ad-supported services, indie music publishers had not shared in that revenue because the major labels long considered videos as promotional tools and never paid for licensing the songs used in the videos. But as it became a growing revenue stream, indie publishers began to grumble that the major labels paid the major publishing companies but none of the independent music publishers.

"We're all navigating through a rapidly changing business environment and NMPA's job is to ensure that the rights of every songwriter and music publisher are protected," Israelite said in a statement. "This is a model example of how record labels along with songwriters and music publishers can move forward together to ensure that the licensing process is more effective and efficient, and that all creators are fairly compensated."

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As one of the owners behind VEVO, it's key that UMG was the first major to sign a deal with the NMPA. NMPA music publishers who chose to participate will grant the rights necessary for the synchronization of their musical works with music videos, and, in return, will receive royalties from these videos based on a percentage of UMG's receipts.

"Music videos have become an important part of the music business ecosystem," Israelite added. "The agreement announced today is an important first step in resolving industry-wide music video issues."

While specific terms of the deal have yet to be disclosed, sources say that the agreement calls for publishers to receive 15% of advertising revenues generated by music videos. Moreover, the deal is retroactive back to 2008, but for the first two years, through 2009, the agreed upon rate is 10% of revenue, with the 15% kicking in with revenue generated by music videos in 2010.

"Music videos have become an important part of the music business ecosystem," Israelite added. "The agreement announced today is an important first step in resolving industry-wide music video issues."

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In addition to music video, the deal also covers concert footage, backstage videos and artist interviews, according to sources.

Also, the agreement provides songwriters and music publishers compensation for additional UMG product offerings including ringtones, dual disc, multi-session audio and locked content products, according to the announcement, with additional details expected to be announced on the websites of the Harry Fox Agency and NMPA in the coming weeks. HFA will serve as administrator for the deal between NMPA and UMG.

As for the other majors, "we have raised the issue with [them] and will now turn our attention to pursuing similar agreements," Israelite said.

"We intend to enforce our rights."

Twitter: @billboardbiz