In 2008, a US District Court in Manhattan ordered Yahoo and RealNetwork to pay the American Society of Composers, Authors, and Publishers (ASCAP) a 2.5 percent uniform royalty fee. ASCAP represents about 45 percent of all the musicians whose work is streamed online. ASCAP represents almost 400,000 artists and protested the flat rate that the District Court set. A Tuesday ruling by Judge John W. Walker of the US Appeals Court says the rate set back in 2008 needs to be reevaluated in District Court in order, Judge Walker writes, to “follow an approach more tailored to the varying nature and scope of Yahoo’s music use.” He also remanded RealNetwork back to District Court, ruling they must “conduct a more complete analysis of the various uses of ASCAP music works.”
In 2008, the streaming music fee rate was arrived at by multiplying the total revenue from licensed services by a “music-use-adjustment factor.” This was the ratio of time consumers spent listening to streamed music to their overall time spent on the website. Judge Walker found that the “district court did not adequately support the reasonableness of its method for measuring the value of the Internet companies’ music use
On a related issue, the 2nd US Circuit Court of Appeals in New York ruled that a “download of a musical work does not constitute a public performance of that work” according to copyright law. This is important because Yahoo and RealNetworks were arguing that digital downloads were not, in fact, performances and they did not have to compensate the copyright holders. They were seeking blanket licenses, which would allow them to play ASCAP’s entire catalog instead of having to obtain licensing rights to each song.
The 3-judge panel in New York found in favor of the music streaming sites, writing, “Music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener.”
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