Recording Industry Loses Ringtone Royalties Case

     (CN) – The Recording Industry Association of America failed to present enough of a case to overturn the royalty structure on ringtones and rates on late fees established by the Copyright Royalty Board, the D.C. Circuit ruled.

     In its case against the Librarian of Congress, the association argued for a percentage-of-revenue royalty structure under which copyright owners would get 15 percent from the sale of a cell phone ringtone. Or, in a less-preferred alternative, the association sought a penny-rate royalty of 18 cents per ringtone sold.
     The association claimed the penny-rate royalty structure for ringtones, as set by the board of 24 cents per ringtone sold, is unfair due to “plummeting ringtone prices.” The board said it doesn’t matter what a song is sold for, a penny-rate structure was best over the percentage pay-structure.
      “The board examined the relevant data and determined that there was no meaningful link between the selection of a penny-rate royalty structure for ringtones and future ringtone revenues,” Judge Brett M. Kavanaugh wrote for the circuit. “[The association] has failed to present any basis for us to overturn that conclusion.”
     The association’s objection to a 1.5 percent late fee, set by the board, asserts that such fees are unnecessary because copyright owners have termination rights that can be invoked when payments are late. And late fees are inappropriate because the lateness of payments often results from uncertainty about the appropriate division of royalties among joint copyright owners.
     “[The association] has failed to raise any argument that would justify our overturning the board’s 1.5 percent per month late fee,” Kavanaugh wrote.

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