The Copyright Royalty Board released a preliminary ruling in October 2008, establishing mechanical royalty rates for the new digital era, including the first-ever statutory royalties for on-demand streams, limited downloads, and ringtones, as well as for physical recordings and permanent digital downloads (DPDs). The decision is still pending final approval, but is anticipated to be finalized Spring 2009. The proposed schedule of rates is set below, but is subject to alterations until the final decision is published by the Register of Copyrights. The rates will be effective once this final decision is published, and record labels, online music services, and other licensees will have 180 days to include these royalties in their regular royalty reports.
The new schedule of mechanical rates, which will be in effect after final publication in the Federal Register until December 31, 2012, is:
Physical recordings:
9.1 ¢ for recordings five minutes or less; for recordings over 5 minutes, 1.75 ¢ for each minute, rounded up.
Permanent Digital Downloads (DPDs):
9.1 ¢ for recordings five minutes or less; for recordings over 5 minutes, 1.75 ¢ for each minute, rounded up.
Mastertone Ringtunes:
24¢ (for non-derivative uses)
Rates for limited downloads and on-demand streams vary by service offering.
Mechanical licenses are required under U.S. Copyright Law if one wants to duplicate and distribute a recording of a song that is owned by someone else whether in a physical or digital configuration. Through proper licensing, the publisher, and ultimately, the songwriter, are compensated for the use of their work.
