Frederick Lane, newsfactor
In a 153-page decision, U.S. District Court Judge William Conner adopted ASCAP's proposed method for calculating the cost of a blanket license (a percentage of each company's music revenues), but rejected the organization's pitch for a flat three percent fee, which the court felt was too high.
"After consideration of all the factors above," Conner wrote, "the court finds that a fee rate of 2.5 percent of applicant's music-use adjusted revenue is reasonable. Such a rate would result in 2006 fees of approximately $5.95 million for AOL and $6.76 million for Yahoo."
The online services had proposed a far more complicated compensation structure that used different percentages for different types of online use.
Evidence of Growing Online Revenues
ASCAP President and Chairman Marilyn Bergman praised the decision in a press release. "The court's finding represents a major step toward proper valuation of the music contributions of songwriters, composers and publishers to these types of online businesses," Bergman said, "many of which have built much of their success on the foundation of the creative works of others."
"This decision," she added, "will go a long way toward protecting the ability of songwriters and composers to be compensated fairly as the use of musical works online continues to grow."
The court's decision casts a bright light on the growing appetite for online music and the impressive advertising revenues that such services generate.
Large Award, Lengthy Decision
The potential size of the ruling stems from the fact that it covers a multiyear period, beginning on July 1, 2002, and running through December 31, 2009. The precise amount is still not certain, due to some missing information regarding Real Network revenues during the period.
The length of the court's opinion is largely due to the exhaustive testimony and proposals presented by the two sides during 13 days of hearings between Oct. 25 and Nov. 15, 2007. Among other things, Connor said, he received 203 exhibits from the parties and more than 600 pages of proposed findings.
Much of the complication in the case stemmed from the myriad ways in which online services use copyrighted music, and the challenge of finding comparable licensing agreements. As both parties and the court noted, it is difficult to keep track of how music is used online today, let alone the ways it might be used in the future.
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