ASCAP To Online Music Services: Pay Up Like The Judge Told You To

noah | May 1, 2008 6:00 am

Yesterday, a judge ruled that RealNetworks, AOL, and Yahoo! had to pay the American Society of Composers, Arrangers, and Performer 2.5% of “adjusted music-use revenue” between 2002 and 2009. That’s half a percentage point higher than what terrestrial radio stations have to pay to the organization, a decision that U.S. District Judge William C. Conner came to because online radio generally plays more songs per hour than its over-the-air The three companies–who had proposed rates ranging from .9% (for music videos) to 2.5% (for on-demand audio)–could owe as much as $100 million to ASCAP as the result of the decision, and needless to say, they are not very pleased.

While none of the Web companies involved would comment on the judge’s decision, a source close to the three sounded like the players on a baseball team after the other side just hit a walk-off home run.

“This wasn’t good for us, to say the least,” the source said, adding that the judge’s order isn’t yet final and that the three companies plan to continue fighting.

If the final fee structure looks anything like what is prescribed in the judge’s written opinion, RealNetworks, Yahoo, and AOL would likely have to raise prices. It may also mean that the cost of doing business for anyone streaming music over the Web just went up.

“What this means to other licensees is, they now see what a standard benchmark fee should look like,” [ASCAP CEO John] LoFrumento said. “They now know what to expect from the rate court.”

Somehow no online-music services announced that they’d be closing today, but I guess part of that is because the fees were retroactive to 2002 so they’d be in for paying up anyway. What the ASCAP decision means for consumers [] Court Sets Royalty Fees To Be Paid To ASCAP [WSJ]