• by Erik Sass  @eriksass1, September 24, 2008

Several months ago, the Recording Industry Association of America and other groups representing musicians and studios reached a settlement with online music services concerning royalties for streaming audio and temporary downloads. This week, the parties disclosed the exact terms of the agreement, which remained confidential until a draft version was drawn up for the Copyright Board.

The settlement effectively averted a lawsuit that threatened to disrupt the growth of online radio.

Per the terms of the agreement, online music services will pay 10.5% of their total revenues to the musicians and studios that own songs played or temporarily downloaded online. Performance royalties for songwriters will also be included in this sum.

However, the agreement does not set royalty rates for permanent downloads, so both sides are awaiting the judgment of U.S. Copyright judges on permanent downloads, expected early next month.

Previously, the Recording Industry Association of America had demanded a per-play royalty of $0.0019 per song for streaming and temporary downloads, which many online radio services complained would drive them out of business.

This settlement, first announced on June 18, represents a compromise between online music services and a group of industry organizations representing musicians and studios, including RIAA, the National Music Publishers' Association, the Nashville Songwriters Association International and the Songwriters Guild of America.