YouTube Ordered To Pay $1.6 Million To ASCAP

from the making-sausages dept

You may remember last year around this time, a district court set a totally arbitrary royalty fee that AOL, Yahoo and RealNetworks had to pay ASCAP for music streamed over their services. Reading through the details of the decision was immensely troubling, because it seemed to calculate the amounts on a somewhat meaningless formula based on taking a percentage of revenue from the companies that had absolutely nothing to do with music itself. Basically, it looked at almost any revenue that somehow sorta kinda touched on music (including search) and included that as part of the calculation process. Recently, ASCAP and Google went through a similar case in front of the same district court to determine just how much Google has to pay ASCAP for all the music streamed on YouTube. To be honest, I'm still not sure why it makes sense that Google has to pay anything for this, but that's one of the oddities of modern copyright law.

While the decision hasn't received much press attention, last week, the court ordered Google to pay $1.6 million to ASCAP (thanks to Eric Goldman for sending me the decision). The court seemed to take a "split the difference" approach, as ASCAP had asked for $12 million for all music streamed between 2005 and the end of 2008 (and another $7 million for 2009). YouTube, in response, had suggested $79,500 for 2005 through the end of 2008 and then $20,000 per quarter ongoing. The court rejected both proposals, and dinged both companies for weakly supporting their positions, or being somewhat misleading in their assertions. Google, for instance, tried to focus on the number of "music videos" as compared to the total number of videos on YouTube, though the court noted that the music videos seem to get a lot more views than many of those other videos, and it doesn't take into account the time spent viewing each video. ASCAP basically said: "just take that formula you used last year for AOL, Yahoo and Real and apply it to Google revenue."

The court, instead, went into a lengthy justification of trying to come up with a "fair" proposal, involving an awful lot of redacted information on YouTube's revenue (though... if you work through all the numbers you might be able to piece back together some revenue info) and eventually came up with $1.4 million for 2005 through 2008, and then $70,000 per month afterwards, which, when added to the additional fees this year, brought it up to $1.61 million to date (and counting). Of course, this is all supposed to be a temporary sort of thing until the two sides can work out an agreement on their own -- but given the vast differences in proposals (as the court noted, ASCAP was asking for a rate 150 times as large as YouTube's proposal), it doesn't seem like the two sides are close.

Either way, reading this ruling as well as last year's ruling shows what a total mess this process is. Basically, ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash. I know that ASCAP supporters will claim that the money is for songwriters, not the record labels, and it's important and blah blah blah. But the whole system of such collective licenses is a mess that it makes it close to impossible to do anything with music without getting yourself into a huge licensing hole. For more than a century now, Congress and the courts seem to look at every innovation and simply slap another license fee on it, and leave it to the courts to sort out any mess. All of these license fees add up to a massive tax on innovation that divert money from good business models and into the hands of collections societies, who siphon off a piece and often don't do a very good job distributing that cash. It's a massively inefficient model that's simply not needed.

Filed Under: copyright, court, rates, songwriters, streaming
Companies: ascap, google, youtube


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  1. identicon
    Rediculous, 10 Jun 2009 @ 10:15am

    Rediculous

    Mike says: ASCAP gets to go in and demand cash from anyone who benefits from music anywhere, and a judge sorta randomly makes up reasons to give them cash.

    This is true.

    ASCAP is contacting people (I was) and saying they need to get a license for embedding YouTube videos. They claim any website is "helping" the transmission of their materials even if the website in question hosts or streams nothing. They claim every website needs a $340 license even though the primary purpose of the website may be about something different than music and the video(s) may not contain any music whatsoever by any of their represented artists. Oh, and if you make money from your website that has videos on it, they want a proportion of that as well and have a calculation to determine it based on your total page impressions.

    They use page impressions since one naturally has no idea what videos are played how many times and what music may or may not be in them besides the creator and publisher.

    Mike is right in their crazy calculation. Let's say you embed a Hulu video on your website. ASCAP will ask for a $340 "New Media" URL license from you because that video "may" contain a piece of music work from one of their clients and they will take you to court to get money regardless of whether there was or wasn't.

    They will agree that the video creator and/or publisher has most likely already paid a licensing fee to use the material in the piece of work but they now want money from any website embedding the video.

    So what's next? I assume BMI and SESAC will also come and demand a free payment from websites who have any kind of video embedded because it may or may not contain some sort of music by someone they may or may not represent.

    Somebody needs to stop the madness.

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