Online Music Services On the Hook for $100 Million in Royalties?

[Jason Dunn]

http://www.reuters.com/article/inte...usmorningdigest

"Time Warner Inc's AOL unit, RealNetworks and Yahoo Inc could stand to pay up to $100 million in royalties owed to thousands of songwriters and publishers, after a federal judge established a formula for determining the payments. The move could force the three online services to pay royalties to the American Society of Composers, Authors and Publishers (ASCAP) worth 2.5 percent of their music revenue dating back to 2002, ASCAP said. The decision by a judge in the U.S. District Court for the Southern District of New York sets a formula for potential license fees on songs played by the three online services from July 1, 2002 through December 31, 2009, the trade group said."

I'm a big supporter of the rights of musicians and creators to make a living from their music, but somehow this doesn't quite seem to make sense. Weren't the online music services already paying something to ASCAP, and if so, is this retro-active ruling about bumping up the amount paid? It all seems a bit dubious to me, although there's not enough detail in the article to really grasp the full issue.

[Jason Dunn]

http://www.reuters.com/article/inte...usmorningdigest

"Time Warner Inc's AOL unit, RealNetworks and Yahoo Inc could stand to pay up to $100 million in royalties owed to thousands of songwriters and publishers, after a federal judge established a formula for determining the payments. The move could force the three online services to pay royalties to the American Society of Composers, Authors and Publishers (ASCAP) worth 2.5 percent of their music revenue dating back to 2002, ASCAP said. The decision by a judge in the U.S. District Court for the Southern District of New York sets a formula for potential license fees on songs played by the three online services from July 1, 2002 through December 31, 2009, the trade group said."

I'm a big supporter of the rights of musicians and creators to make a living from their music, but somehow this doesn't quite seem to make sense. Weren't the online music services already paying something to ASCAP, and if so, is this retro-active ruling about bumping up the amount paid? It all seems a bit dubious to me, although there's not enough detail in the article to really grasp the full issue.

[makicr]

I looked through the order (it is 153 pages long) real quick and this is what I figure . . .

Evidently, the three web providers applied for licenses from ASCAP but could never figure out what rate they should pay out at. ASCAP applied to the Court for determination of fair rates for the licenses. Each of the providers enterred into "interim" rate agreements, pending a determination on the applications to the Court. Now that the Court has come up with its formula, each of the providers has to calculate what should have been paid, subtract what they actually paid, then cough up the difference.