In what is being dubbed “breakthrough that will facilitate new ways to offer music to consumers online” by the music industry groups representing songwriters, music publishers, record labels and digital music websites, they have have ended a seven-year dispute over two types of music royalties. The agreement applies to on-demand music streaming from the likes of Imeem, Napster (NSDQ: NAPS) and upcoming MySpace Music in which a user can select the songs that they want to hear, but doesn’t keep any copies.

The new agreement was between Digital Media Association (DiMA), the National Music Publishers’ Association (NMPA) and the Recording Industry Association of America (RIAA), together with the Nashville Songwriters Association International (NSAI) and the Songwriters Guild of America (SGA). They have agreed on the so-called “mechanical royalties” for each time a song is played this way…they will be around 10.5 percent of revenues, after costs and other royalties. Existing mechanical payment is a flat rate of 9.1 cents per song played.

But it excludes the more contentious one about online radio streaming royalties that the likes of Pandora have been crying foul about, as LAT blog points out. That’s still at a stalemate between SoundExchange, and online streaming services.

Complex enough to make you head spin like a record…more here.

We just had our EconMusic conference in London, where we talked about the changing landscape of digital music. Check out our coverage on paidContent:UK.