http://www.theregister.co.uk/2006/03/03/songwriters_dmf/

Music companies - and we blur the distinction deliberately for the moment, for the sake of simplicity - paid songwriters in two ways. For what they called 'licensing' - for masters and movie soundtracks, for example - the artist took home 50 per cent of the deal. For 'royalties', the artist typically gained or 20 per cent of wholesale or 10 per cent of retail. Along came the digital download services. When the labels cut deals for their catalogs with third parties, they considered it a royalty, rather than a licensing deal. That reduced the amount of money going to songwriters overnight.