The Copyright Office actually offered its opinion on this issue several years ago.
In August 2001 MaryBeth Peters, the Register of Copyrights opined in written testimony before congress that, "although we recognize that it is an unsettled point of law that is subject to debate, we do nor endorse the proposition that a digital download constitutes a public performance even when no contemporaneous performance take place."
This March, Peters, who is still the Register of Copyrights, appeared to reaffirm this position in the face of ASCAP's action. In testifying before a congressional committee on digital music licensing, she said, "as we have seen, licensors have rarely turned down the opportunity in the digital age to seek royalties, even when the basis for their requests is weak at best."
A major distinction between standard radio and TV broadcast on the one hand, and downloading on the other, is that publishers and songwriters already collect a DPD royalty of 9.1 cents from downloading services, whereas they do not collect any mechanical royalties for transmission of music to radio or music performed on TV. Thus ASCAP's demand for an additional royalty for downloading seems like a classic "double dip."
The Federal Court is not expected to rule on ASCAP's demand until May, but a favorable result for ASCAP seems doubtful.
What tipped ASCAP to act
ASCAP waited for years before bringing this claim for additional revenues from downloading. And as we have just discussed, their arguments seem like a long shot. So why are they doing this? I believe the reason actually has more to with TV programs and movies then with music.
ASCAP collects performance royalties for music included in TV programs and movies whenever they are broadcast on TV. This has been a huge and growing source of revenue for them especially as more TV shows such as The OC, Gray's Anatomy, and The Sopranos, make increasing use of music. As new digital systems for downloading from the Web and playback on TV roll out, such as Apple TV, there is a greater likelihood that many more people will download their TV programs and movies instead of watching them as they are broadcast.
If the broadcast TV model declines because of this new way of consuming TV shows and movies, there will be less income for ASCAP, which receives a percentage of advertising income from the broadcast services. ASCAP's revenue may therefore suffer significant erosion. But if they successfully position themselves to collect monies from downloading music as well as performances, they will collect more monies as more people download TV shows and movies. ®
Steve Gordon is an entertainment attorney and consultant in New York, and the author of The Future Of The Music Business. He was Director of Business Affairs, TV and Video at Sony Music for ten years. His website is at www.stevegordonlaw.com.