The Digital Media Association has come to an agreement with the respective organisations over a licensing model for digitally distributed and streamed music.

The new plan, which applies mainly to streaming services like Last.fm, means a mechanical royalty to reproduce music, will stand at 10.5 per cent of revenue.

Struggles

This means those currently struggling to succeed in an increasingly busy marketplace stand to lose an even greater portion of their income, and will likely force some out of business altogether.

While fixed downloading won't be subject to the agreement, as it has other royalty channels in place, subscription-based services, such as the now legal Napster, will be forced to cough up.

On the plus side, the threats of legal action over the multitude of streamed internet music services appears to have receded with the current agreement, so while some may be forced to close, others will be relieved to have the huge fines hanging over their heads removed.

Jonathan Potter, Executive Director of DiMA says: "DiMA is particularly pleased with the agreement to end litigation and threats of litigation involving several of our member companies so that they can focus on building innovative businesses that can effectively fight piracy, the music industry's greatest threat."