Feds rule on ringtone royalty rates

A panel of federal judges ruled Thursday to establish a mechanical royalty rate for mastertones, setting a rate of 24 cents per ringtone. The ruling by the Copyright Royalty Board--a panel of three judges appointed by the Librarian of Congress--came as part of a series of judgments on royalty rates for CDs, downloads and other music formats, all applying strictly to mechanical royalties, which are paid to composers and publishers, not performers. Royalty payments for mastertones--i.e., ringtones made from a snippet of music from an original recording--were previously negotiated by copyright holders. The new rate will be in effect through 2012.

The Copyright Royalty Board ruled to maintain royalty rates for physical recordings at their present rate of 9.1 cents for each track. The board also set the same rate for permanent digital downloads, in effect declaring music from virtual storefronts like Apple's iTunes and Amazon MP3 as valuable as traditional physical recordings. With music industry revenues eroding, publishers had petitioned the board to increase royalties for physical recordings and downloads as much as 66 percent--in a document submitted to the judges, an Apple executive responded to the proposed hike by contending such a significant increase could force the computing giant to shut down iTunes altogether, arguing the store operates within extremely thin margins.

For more on the royalty rulings:
- read this New York Times article

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