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Stop the evil DiMA!

Dear fellow geeks,

Recently I have been seeing a few things on the interweb about a very quiet battle for the future of music and the internet. Depending on who you are, some of the proposed changes could be extremely lucrative… or they could make it hard to sit down for a while. Basically on January 28th of 2008, the Copyright Royalty Board (CRB) began hearings to set mechanical rates for the songwriters and music publishers of the United States of America (yeah U.S.A…. you know that place where they have record budgets that are more than $35.00 and a few pieces of pocket lint).

You may be thinking “why the hell should I care?” In reply to this I might ask “why the hell WOULDN’T you care? Basically with the ever evolving music industry these rates could be the songwriter’s main form of income in the future… or in the case that the DiMA prevails it could be the reason every artist on planet earth starves to death catapulting the world back into the dark ages where music is replaced by computer generated beeping and machine noise that eventually drives us all to kill each other… (Matt takes a breath…) WELL maybe not that extreme, but you never know. I any case I will leave up to you to reason this letter from the president of the National Music Publisher’s Association (NMPA) David Israelite. When you are done you can decide the merit in asking yourself the “why the hell should I care?” As a aspiring songwriter I will be trying to find some way I can aid in turning the outcome away from the desires of the evil DiMA. You should too.

Dear NMPA Member and prospective member:
On Monday, January 28, the Copyright Royalty Board (CRB) begins the hearing that will determine mechanical rates for every songwriter and music publisher in America. It will be the most important rate hearing in the history of the music industry because in addition to setting rates for physical products, rates will be set for the first time ever for digital products such as digital downloads, subscription services and ringtones.

The National Music Publishers’ Association (NMPA) will be representing the interests of songwriters and music publishers and will be fighting vigorously to protect those interests to ensure that musical compositions are compensated fairly.

On the other side of this fight stands the Recording Industry Association of America (RIAA) and the Digital Media Association (DiMA). Both the RIAA and DiMA have proposed significant reductions in mechanical royalty rates that would be disastrous for songwriters and music publishers. This is literally a fight for the survival of our industry.

To give you an example of what is at stake, the current rate for physical phonorecords is 9.1 cents. The NMPA is proposing an increase to 12.5 cents per song. The RIAA, however, has proposed slashing the rate to approximately 6 cents a song – a cut of more than one-third the current rate!

For permanent digital downloads, NMPA is proposing a rate of 15 cents per track because the costs involved are much less than for physical products. The RIAA has proposed the outrageous rate of approximately 5 – 5.5 cents per track, and DiMA is proposing even less.

If you find that troubling, it gets worse. For interactive streaming services, which some analysts believe will be the future of the music industry, NMPA is proposing a rate of the greater of 12.5% of revenue, 27.5% of content costs, or a micro-penny calculation based on usage. The RIAA actually proposed that songwriters and music publishers should get the equivalent of .58% of revenue. This isn’t a typo – less than 1%. And DiMA is taking the shocking and offensive position that songwriters’ and music publishers’ mechanical rights should be zero, because DiMA does not believe we have any such rights!

The initial hearing will last four weeks, with the three permanent Copyright Royalty Judges hearing arguments Mondays through Thursdays from 9:30 am – 4:30 pm each day. At the conclusion of the initial hearing, there will be more discovery, followed by a rebuttal hearing in May, and a final decision expected on October 2.

The NMPA will be spending millions of dollars in this proceeding to protect the interests of songwriters and music publishers against the much larger record labels and digital media companies. And although we face such an enormous fight, we have an incredible advantage – we represent songwriters, without whom the record labels and digital music services could not exist.

As always, we appreciate your support of the NMPA which allows us to wage this fight on your behalf.

David Israelite
President & CEO


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