This afternoon, the Digital Media Association announced a new agreement with organizations that represent musicians and songwriters that will provide a streamlined licensing procedure for many models of digital music distribution. The new agreement doesn't apply to "download to own" music, but will apply to streaming services, including subscription and ad-supported music (think Last.fm and SpiralFrog). The agreement has been submitted to the Copyright Royalty Judges for approval.

For the purposes of this agreement, musicians and songwriters were represented by he National Music Publishers' Association, the Nashville Songwriters Association International, and the Songwriters Guild of America. They negotiated the deal with the RIAA and the Digital Media Association, which includes industry heavy-hitters like Amazon, Apple, and Microsoft. But the DiMA also includes a variety of companies that are doing less well under the current system, such as the recently-purchased Napster, and Internet radio services like Live365 and Pandora, which are buckling under the current royalty system.

When we looked at these negotiations back in February the different sides couldn't even agree on the basics—what sort of license was required for a given activity, much less the royalties that should be paid. The new agreement provides for a mechanical royalty (one for producing a copy of a work) that's pegged at 10.5 percent of revenue for interactive and restricted streaming "less any amounts owed for performance royalties." This suggests that performance royalties may still apply in some contexts, but that its application won't up the cost for those streaming the material. Those contexts where they do apply appear to be pretty limited, as the announcement states that, "the mechanical licenses issued under its provisions will include all reproduction and distribution rights necessary to provide the licensed limited downloads or interactive streams."

These prices will apply to restricted downloads, such as those provided by subscription services, as well as interactive streaming services, such as ad-supported music, in which the listener has to perform an action before the music will play. Broadcasters also get the ability to advertise their services using royalty-free promotional streams, although the conditions that make something "promotional" weren't defined.

Nearly every organization involved issued statements praising the agreement for ensuring that the people that they represent will get their fair share of revenues, but there were a few exceptions to the mutual back-patting. Jonathan Potter, Executive Director of DiMA, for example, focused on the legal hassles. "DiMA is particularly pleased with the agreement to end litigation and threats of litigation involving several of our member companies," he stated, "so that they can focus on building innovative businesses that can effectively fight piracy, the music industry’s greatest threat."

For their part, the record labels appear to view this as simply one part of a larger fight to sustain their business. "This is a first step to establishing fair rates that properly compensate writers for their creative efforts," stated EMI's CEO Roger Faxon. "We'll continue to work hard to establish a framework that properly reflects the value of songs in all their digital forms."

Meanwhile, PC Magazine has talked to one of DiMA's members that was left out of this agreement: Pandora, which operates a noninteractive streaming service. Although the agreement states that "noninteractive, audio-only streaming" will not require reproduction and distribution licenses from the copyright holders, it fails to put any figure in place for the royalties that these streams require. A Pandora spokesperson said the company found the agreement an encouraging sign that all sides can talk, but it still doesn't solve the problem of the licensing fees that threaten to cripple Internet radio.

Although Internet radio is left out of this agreement and there are clearly going to be further legal tussles among the parties involved, the deal could be significant in terms of providing new ventures with a picture of the sort of business expenses they need to be planning for, and will provide a level playing field for both new and established ventures. As long as some of the activities are well defined by the language of the agreement, it may let them plan for having reduced legal fees.

Ars has requested a copy of the agreement from the parties involved; as of publication, none of them have responded.