And we wonder why VCs hate this space.
After unsuccessfully fighting for public performance income on ringtones, ASCAP has now been denied a similar license fee for downloads – again. That was just part of a broader brush-back by the US Second Court of Appeals on Tuesday, which asked the lower court to take another look at ASCAP royalty rates applied to both Yahoo (NSDQ: YHOO) and RealNetworks (NSDQ: RNWK).
Both had been paying 2.5 percent of broader music-related revenues. But the three-judge appellate panel called for an ongoing rate “more tailored to the varying nature and scope” of the services in question.
That is, among other issues. “The district court did not adequately support the reasonableness of the 2.5 percent royalty rate applied to the value of the internet companies’ music use,” the appeals trio ruled, while also calling into question the method for measuring “music use”.
The download part of the decision may seem rather obvious to the outside observer, though in the post-analog land grab, traditional definitions seem to carry little weight. “[We] are, of course, disappointed in the Court’s decision that there is no public performance in the transmission of certain musical downloads,” ASCAP told Digital Music News. “We are studying the decision and will determine what further action is appropriate.”
ASCAP was obviously unhappy about the rest of the decision as well. “The Second Circuit remanded the rate calculation back to the District Court with instructions to determine whether there are ‘more precise or practicable’ methods of fixing a rate for the use of our members’ music,” the group continued. “We anticipate that in the end, the proceeding will result in a fair and favorable license fee to be paid by commercial online services for the valuable intellectual property they use to sustain their businesses…”
ref: US v. American Society of Composers, Authors and Publishers, 09-539, U.S. Court of Appeals, Second Circuit (Manhattan)
This story has been provided by our content partner Digital Music News.