New York – A federal appeals court rejected the notion that
a music download constitutes a "public performance" of the song in
question, overturning the streaming music royalty rates that Yahoo (NASD: YHOO) and
RealNetworks (NASD: RNWK) must pay performing rights organization ASCAP, and ordering a
lower court to re-examine its findings. "In setting the royalty rate, the
district court must follow an approach more tailored to the varying nature and
scope of Yahoo’s music use," the U.S. Second Circuit Court of Appeals said
in its ruling on Tuesday.
"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 ruling continues.
The lower court was
also ordered to "conduct a more complete analysis of the various uses of
ASCAP musical works by RealNetworks."
"Yahoo is pleased with the
court’s decision and looks forward to the establishment of a truly reasonable
royalty license rate that properly accounts for music use on its
services," the company said in a statement.
"We are studying the
decision and will determine what further action is appropriate," ASCAP
said in a statement.
"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
"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 — the music created and owned by the
songwriters, composers and music publishers ASCAP represents."
(DMW previous coverage)