Online music services could pay 100m in royalties

 

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By Stuart Turton

Posted on 2 May 2008 at 11:42

A US federal court ruling could see AOL, Yahoo and RealNetworks coughing up around $100 million in royalties to musicians.

The case was brought by the American Society of Composers, Authors and Publishers (ASCAP), which argued that its members weren't receiving fair compensation for their work, despite it being used by the online service to increase site traffic and generate revenue.

Under the court's ruling, the three online services could be forced to pay royalties to ASCAP worth 2.5% of their music earnings, dating back to 1 July 2002 - a figure which will be calculated by totting up the amount of music streamed and site usage. The ruling doesn't affect the royalties paid by the companies to record companies.

However, the companies were keen to point out that the ruling was little more than the first step in the process of negotiating a final figure, with Bob Kimball, RealNetworks' general counsel saying: "this is a long way from being over. To be clear, the court did not award $100 million in royalties." He went on to describe the ruling as a "general and incomplete formula" and predicted a lengthy appeals process.