A new not-for-profit organization has been formed by four major trade groups to distribute digital home recording royalties to artists and record companies.

The Recording Industry Assn. of America, the National Assn. of Independent Record Distributors & Manufacturers, the American Federation of Musicians and the American Federation of Television & Radio Artists have formed the Alliance of Artists & Recording Companies (AARC), which will work with a steering committee of artist representatives to ensure distribution of royalties.

The organization was formed in response to the Audio Home Recording Act of 1992, which establishes that two-thirds of royalties paid by manufacturers and importers of digital audio recorders and blank media be put into a Sound Recordings Fund for distribution to artists and record companies.

That law, signed Oct. 28, 1992, culminated a long battle on digital audio home taping. The payments will be deposited with the U.S. Copyright Office and distributed to eligible claimants.

Jay Berman, RIAA president, said the new organization was a “natural alliance based on mutual interests. Artists and record companies have been allies in the fight for protection against home copying for more than 15 years.”

France, Germany and the U.K. have similar organizations.

The AARC will operate initially from the Washington, D.C., offices of the RIAA as a cost-saving move, Berman said.

A board of directors composed of artists and record companies will govern the alliance. A panel of artists and their representatives will also be formed to make decisions about distribution of artists’ funds, with a record company panel having similar duties for their own interests.

AARC will pay artists directly, charging an administrative cost no more than 1% of royalties collected.

To facilitate the royalty distribution process and ensure its fairness, the SoundScan system will be AARC’s principal data source for information on U.S. record sales. The system uses point-of-purchase data collected electronically on albums and singles, and will be used to provide information on titles, sales volume, featured artists and record label.

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