A recently reached agreement between songwriters, music publishers, record labels and online music services will provide from now on a fairer compensation for music creators who have their content sold and distributed over the Internet. All songwriters, publishers and performers will receive additional revenue from all the online services, very similar to the rules on selling a CD.

"It's historic in a lot of ways," said Steve Bogard, president of the board of the Nashville Songwriters Association International and an award-winning songwriter. "We have been able to strike an agreement in a new spirit of unity in the music business for all the various digital models, except for straight downloads and (cell phone) ring tones." He explained that the new terms of handling music over the Internet represent a winner formula for everyone, as the favorable rates should please the producers and also make even more tracks available. Aside from these benefits, the new rules will also encourage the industry’s newcomers, who will be rewarded for their work straight away.

The royalty rates received from on-demand music Web sites will be calculated through a new system. Each provider of such a service will have to pay a royalty of 10.5 percent of revenue, aside from the other royalties imposed. Also, the songs will be available for listening but there will be no option for permanently keeping the tracks.

"This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators and online services," said Mitch Bainwol, Chairman and CEO of the RIAA. He also added that "The agreement demonstrates that our industries can work collaboratively to solve complex issues."

The Digital Media Association (DiMA) also appeared extremely satisfied with the results of the discussions, referring to the agreement as a breakthrough that will help the development of the online music industry. Other groups that joined DiMA in the debates include the Recording Industry Association of America, the Songwriters Guild of America, the National Music Publishers' Association representing the American publishers and the Nashville Songwriters Association International. The Recording Industry Association of America includes the labels owned by the four major record companies, Vivendi Sa's Universal Music Group, Sony Music Entertainment Inc., EMI Group PLC, and Warner Music Group Corp.

Unfortunately, the royalties for Internet radios, one of the most controversial subjects related to this topic, was not addressed during the discussions. The rates for these stations, such Pandora, are expected to be settled at a different time, but the general belief is that this is a big first step in the right direction and from this point on things can only get better. The groups involved had to struggle for a long time in order to get their point of view across, and the decision reached marks almost seven years of on-going debates.

The Copyright Royalty Board announced that its final ruling will be presented on October 2nd. The decision will also include the rates for permanent downloads and physical products such as DVDs.