The lawsuits that the RIAA bring against illegal downloaders garner most of the attention paid to online music royalties, but suing grandmas and college kids is never really about the money; it's about discouraging many by suing a few. The American Society of Composers, Authors, and Publishers, better known as ASCAP, took a more direct approach. They asked a court to establish a framework of payments to artists represented by ASCAP from three large online music services. A decision was recently handed down, and it's a doozy: AOL, Yahoo, and Real Networks might be on the hook for as much as $100 million dollars for offering ad-supported streaming music on their websites from as far back as 2002, through the end of next year.
"It is critical that these organizations share a reasonable portion of their sizable revenues with those of us whose content attracts audiences and, ultimately, helps to make their businesses viable," said ASCAP President and Chairman Marilyn Bergman, who also is a lyricist.
Conner's ruling -- which has no effect on the royalties owed to record labels -- did not specify how much ASCAP members are owed.
"This historic decision, for the first time, provides a clear framework for how the online use of musical works should be appropriately valued," said ASCAP Chief Executive Officer John LoFrumento.
In the long run, the decision might actually help big companies that feature such musical content, as it will likely result in the demise of many smaller sites who can not afford to pay such royalties for music, thereby resulting in a less competition and higher ad revenue per ad for the sites that remain. But we can't imagine Yahoo is too enthused about having a big ongoing liability plopped on their bottom line right about now. Look on the bright side, Yahoo; maybe Ballmer will end up paying it.