Recording Industry Loses Bid Over Royalties

The recording industry lost a legal bid to extract higher royalties out of three firms that transmit digital music through satellites and cable lines. The U.S. Court of Appeals for the District of Columbia upheld a royalty formula established by the Library of Congress for three digital audio subscription services, Digital Music Express, Digital Cable Radio Associates and Muzak. The recording industry had sought to increase the 6.5% rate the library established last year for the services. The appeals court rejected recording industry arguments that the library failed to set a market rate, saying that federal law gives the library broad discretion to determine what constitutes a reasonable royalty. The 3-0 ruling could undermine music industry efforts to negotiate higher rates for Internet recordings--a market expected to grow exponentially in coming years. The Recording Industry Assn. of America at one point said it and its members should receive more than 40% of the revenue derived from sales of digital music.