It was a busy day in the US pop courts yesterday. On less sensational issues, a senior federal judge, essentially acting as a copyright tribunal, set an important precedent regarding the publishing rights that exist in the digital music domain.
The dispute centred on when 'performance royalties' should be paid to publishers and songwriters on digital music. It is generally agreed that digital music providers should pay performance royalties when they offer music streams, because streamed music is similar to radio, and radio broadcasters pay a performance royalty on music they air. However, when digital music providers sell downloads, a 'mechanical royalty' is paid - in the same way it would if a CD was sold - but to date performance royalties have not been considered relevant in that domain.
That was until the latest royalty negotiations between US publishing royalty collecting society ASCAP and digital music firms AOL, RealNetworks and Yahoo! ASCAP argued that because many users 'progressively download' tracks from download platforms, so that the track actually plays as it downloads, which can seem like a stream to the user, a 'performance royalty' was, in fact, due. The digital music firms disagreed, which is why the case went to the federal court, who traditionally play an arbitrator role in any royalty disputes involving ASCAP.
On this one Judge William Connor sided with the digital music firms, arguing that while US copyright law does allow for some mechanical and performance rights overlap in the digital domain, it does not allow overlap of this kind. In his ruling he wrote: "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. 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...".
Commenting on the ruling, Kenneth Steinthal, the lawyer representing the digital music firms, told reporters: "This is a rewarding victory for our clients on an issue that we thought was very clear from the statue and from what the Copyright Office and other commentators had said about the issue".
ASCAP, needless to say, were less welcoming of the decision, telling reporters: "ASCAP respectfully disagrees with the court's decision. 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".
In case you're a bit confused about all these different kinds of rights - the performance rights are what PRS deal with in the UK, while mechanical rights are the domain of MCPS. Of course, because PRS and MCPS operate as an alliance these days, and because many online services are covered by the Joint Online Licence that PRS/MCPS devised together, the distinction between royalty types isn't talked about so much, though there has been some debate as to whether a mechanical royalty is due on streams as well as the performance royalty (MCPS argue it is, if I remember rightly).