Web Portals Owe ASCAP Big Bucks: Report

MediaPost reports that Web companies AOL, Yahoo and RealNetworks owe ASCAP, the songwriters group, multimillions in royalties for music streamed online, according to a federal court ruling.

“Federal District Court Judge William Connor in White Plains, N.Y. decided this week that the American Society of Composers, Authors and Publishers (ASCAP), which represents more than 320,000 members, is entitled to 2.5% of all music-related revenue from 2002 through 2009. The court still has to determine the precise amount owed, but ASCAP estimates the total could reach $100 million.”

The report said that AOL, Yahoo and Real Music had been streaming music without a definitive royalty agreement for years because a consent decree with the U.S. Department of Justice dating back to 1941 requires ASCAP to grant a license to any company that requests one.

OK, so what’s the big deal? It’s this: terrestrial radio stations pay only 1.615% of their gross revenue as royalties to ASCAP, but Connor listed several reasons why AOL, Yahoo and RealNetworks should pay more, the article said. Each company “can offer its customers the ability to stream virtually any selected song, music video or individually designed playlist, at any time on-demand,” Connor wrote. “Terrestrial radio stations cannot offer the audiovisual programs with feature, theme and background music … Nor can they offer customizable radio broadcasting, the ability to skip songs, or the ability to stream entire CDs on demand without commercial interruption.”

This ruling could have an adverse effect on other Internet radio sites (which are already in trouble) as well as streaming media on cell phones.