The agreement proposes for the first time mechanical royalty rates for interactive streaming and limited downloads, including subscription and ad-supported services. The agreement proposes a flexible percentage of revenue rate structure, with minimum payments in certain instances.

Limited download and interactive streaming services will generally pay a royalty of 10.5 percent of revenue, less any amounts owed for performance royalties. In certain circumstances, royalty-free promotional streaming is allowed. The parties said that non-interactive, audio-only streaming services do not require reproduction or distribution licenses from copyright owners.

The agreement does not cover royalty rates for physical product or permanent music downloads. The Copyright Royalty Judges will issues a ruling on those rates by October 2.

"This agreement provides a flexible structure to support innovative business models in the digital music marketplace that will benefit music fans, creators and online services," said Mitch Bainwol, Chairman and CEO, RIAA.

"The agreement demonstrates that our industries can work collaboratively to solve complex issues."