Royalties deal on music downloads

The British music industry has struck a deal with music composers to set a standard royalty rate for songs downloaded over the internet.

The three-year agreement averts legal action between the two sides after a long-running battle that arose after the rapid upsurge in the amount of people downloading music through services such as Apple's iTunes.

Composers will be eligible for an 8 per cent cut of the revenue each time their music is downloaded online. The deal represents a compromise for both sides as songwriters and composers had pushed for a 12 per cent royalty, arguing that the lower costs of delivering music over the internet compared to releasing CDs meant they should get a larger slice of the profit. Record companies pushed for a 6.5 per cent royalty, arguing that the download industry is still immature.

The deal will last for only three years, given the fast-changing nature of the music download industry.

The UK music download market is Europe's biggest, with 34 million sales this year - double the amount in 2005. The MCPS-PRS alliance, which represents songwriters, says the UK market could be worth £385m by 2008.