Google, Apple, and Amazon Can at Least Agree on This

Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Google (NASDAQ:GOOG) have reached an agreement with record industry representatives to set royalty payments for their cloud services.

The Digital Media Association, the Recording Industry Association of America, and the National Music Publishers Association have agreed to set rates for 2013 to 2017. The Copyright Royalty Board will have to ratify the contract the groups submit. The Digital Media Association represents all technology companies, which include Microsoft Corp. (NASDAQ:MSFT), MySpace Music, Viacom Inc.’s (NYSE:VIA) MTV Networks, Slacker Inc. and Nokia (NYSE:NOK).

Under the deal, five new categories of royalty payments have been formulated that include services like Apple’s iCloud, Amazon’s online music locker, and Google’s free cloud service. The pact also covers existing royalties for CDs and downloads, but few changes have been made. According to the executive director of the Digital Media Association, this is the first time in history that the sides have settled an agreement without going to trial. The parties last reached an agreement in 2008 after a court ruling set royalty rates for CDs, downloads, and ringtones.

Apple, Amazon, and Google created cloud services that allow users to purchase, store and access music from Internet-connected devices. However, these technological developments were not covered by the earlier royalty agreement. As technology companies develop alternative way for consumers to purchase and listen to music, musicians and the record industry are receiving new forms of payment.

The future of the industry is turning to online services, and companies are developing services that cater to new technology. Setting royalty rates will pave the way for more companies to offer and begin experimenting with music services. Royalty agreements will continue to evolve as new models and services are developed in the future.