ASCAP blue after royalty ruling

Court: Downloading music not a 'public performance'

A senior federal court judge who often has sided with copyright holders ruled against ASCAP on Wednesday.

Digital music services AOL, RealNetworks and Yahoo! Inc. won a summary judgment from Judge William Connor in New York declaring that downloading music files is not a "public performance" of the song. As a result, the services are not required to pay royalties for downloads to the performing rights organization that represents publishers and songwriters.

This is the first time a court had been asked to decide whether downloading a music file is a "performance" of the song. Currently, most digital services only pay royalties for the "reproduction" and "distribution" of the song for a download; they pay royalties for the performance of a song streamed over the Internet.

The decision came during an ASCAP rate proceeding with the three digital services before Connor in the U.S. District Court for the Southern District of New York. The court has jurisdiction under a 1941 antitrust consent decree to oversee ASCAP's activities in the music industry, which includes setting royalty rates when parties cannot agree on a fair fee. The parties had been unable to negotiate performance rates for the services, and they asked the court to decide a fair rate.

ASCAP had proposed a rate that included a fee for performance rights in downloads. The services objected to paying for this right. ASCAP and the services each filed motions for partial summary judgment. Several groups — including the RIAA, the National Music Publishers' Assn. and the Digital Media Assn. — filed friends of the court briefs to offer their views on the issue.

Connor wrote that under the Copyright Act, there is not a "public performance" unless there is first a performance. To perform a work means to recite, render or play the work. For a song to be performed, it must be "transmitted in a manner designed for contemporaneous perception," the court wrote. A person must be able to perceive the song as it is being transmitted.

Downloading a music file is more accurately characterized as a method of reproducing the file, the court wrote. Digitally reproducing a file requires a digital phonorecord delivery license, similar to a mechanical license for physical goods like CDs.

In the 12-page opinion, the court noted that its position was supported by the Copyright Office's 2001 report to Congress on the effect of new and developing technologies and the Commerce Department's 1995 report of the Information Infrastructure Task Force. They did not endorse the position that a download constituted a public performance.

ASCAP had argued that downloaded music files are indistinguishable from streamed performances because, after a certain amount of data has been transmitted, the purchaser can begin listening to the transmitted portion of the music file. The court wrote that it was not swayed by this argument.

"The mere fact that a customer's online purchase is conveyed to him in a piecemeal manner, each segment of which is capable of playback as soon as the transmission is completed, does not change the fact that the transaction is a data transmission rather than a music broadcast," the court wrote.

"Surely ASCAP would not contend that if a retail purchaser of musical records begins audibly playing each tape or disc as soon as he receives it, the 'vendor' is engaging in a public performance. … It is not the availability of prompt replay but the simultaneously perceptible nature of a transmission that renders it a performance. …"

Although it is theoretically possible for the same transmission to be both a public performance and a reproduction, the court wrote, there were no grounds to call all downloads a performance. "Congress did not intend the two uses to overlap to the extent proposed by ASCAP in the present case," Connor wrote.

"This is a rewarding victory for our clients on an issue that we thought was very clear from the statute and from what the Copyright Office and other commentators had said about the issue," says Kenneth Steinthal, a partner with Weil Gotshal & Manges, which represents AOL, RealNetworks and Yahoo!

"ASCAP respectfully disagrees with the court's decision," the group said. "We are considering our options as the proceeding to determine reasonable license fees to be paid by AOL, RealNetworks and Yahoo! to compensate our writer and publisher members for the use of their music goes forward to trial (scheduled to begin May 21)."

Susan Butler is a senior correspondent for Billboard.