May 1st, 2008
Judge: Webcasters owe ASCAP $100m
A federal judge ruled that that webcasters owe ASCAP – one of three major performing rights organizations representing songwriters – a flat 2.5 percent cut of music revenues.
It’s a big chunk of change. For just the year 2006, it will cost AOL, Yahoo and Real somewhere on the order of $18 million. The amount owed for the past seven years of webcasting: roughly $100 million.
The web guys had proposed a complicated, five-tier royalty system that would have meant far lower rates – about $3.5 million by Ars Technica’s calculations. ASCAP’s proposal had the beauty of simplicity – a flat 3 percent cut – and the beauty of bucks: close to $24 million for the three big guys. In a 153-page decision (PDF), the judge opted for ASCAP’s solution, less a half percentage point. Ars’ calculations are below:
The decision is particularly significant because it is retroactive, covering a period that goes all the way back to July 1, 2002 (and will continue through the end of 2009). In a statement praising the decision, ASCAP noted that this could mean a $100 million payout from the three companies across all seven years of the blanket licensing. If anyone continues to think that webcasting is still a niche business with no revenues, this ruling should show just how much money exists in the current market.
