Emusic, Harry Fox Agency Agree On Mechanical Royalty

Emusic announced its plans to include streaming music to its subscription services along with an agreement with The Harry Fox Agency (HFA), the wholly owned subsidiary of the National Music Publishers' Association (NMPA), to amend their previous Digital Phonorecord Delivery License Agreement to include streaming services.

In August, Emusic launched a subscription service for downloadable music, which gives members access to the entirety of Emusic's collection of songs for $10 a month. As of September 30, Emusic announced 3000 subscribers. The company is not releasing current subscriber numbers but indicated the number was steadily growing.

Emusic plans on adding the streaming feature as a part of the current service by the second quarter of next year. Jene Hoffman, president and CEO of Emusic commented, "We think that at this time the customer is most interested in portability -- being able to download a song and transfer it to a portable player -- but that streaming is a nice additional feature for users with broadband access. We want to offer them that choice."

Traditionally, when a CD is copied for resale, a mechanical royalty is paid to the HFA. Emusic previously worked out a payment arrangement with the HFA for the digital copy made for download in a Digital Phonorecord Delivery License Agreement. Now, EMusic will pay HFA a mechanical royalty fee of one quarter of a cent ($.0025) each time a song is streamed by a user. MP3.com worked out a similar agreement with HFA in October for their My.MP3.com locker service. The terms of the license call for a payment of one-quarter cent each time a song is streamed on demand to a customer from their My.MP3.com locker, along with a one-time fee per track.