Deal Reached on Online Music

Music publishers and record labels declared a truce Tuesday in their battle about copyrights, agreeing to a provisional licensing deal that clears the way for online music subscription services.

The two-year deal, sealed late last week, makes it easier for labels and their partners to obtain the publishing licenses they need for on-demand radio or song-rental services. But it also concedes that the publishers can reap an unusual double royalty, collecting both reproduction and performance fees for each song in an on-demand service.

The agreement came after months of negotiation between the Recording Industry Assn. of America, which represents the labels, and the National Music Publishers’ Assn. and its licensing arm, the Harry Fox Agency Inc. It frees RIAA members to use the publishers’ songs in online jukeboxes and music rental services.

How much the labels will ultimately pay the publishers, however, was left for future negotiations and possibly a federal arbitration panel. RIAA members agreed to pay an advance of $1 million over the next two years, followed by monthly advances of $62,500 until royalty rates are set.

The immediate beneficiaries of the deal are two online music distribution ventures jointly owned by major record labels: MusicNet and Pressplay. Also benefiting are smaller online music companies that have been depending on the labels to obtain licenses from the publishers on their behalf.

Meanwhile, Chicago-based FullAudio, an upstart competing with the label-owned distribution services, is expected to announce today its third licensing deal with a major publisher.

The two-year deal is with Universal Music Publishing Group, a subsidiary of Vivendi Universal, co-owner of Pressplay.

Universal Music Publishing’s roster includes Shania Twain, Mary J. Blige and Blink 182. FullAudio also has licenses from EMI Music Publishing, BMG Music Publishing and EMI Recorded Music.