* Appeals panel decides two Internet music issues
* Sends lower court ruling on fees back for recalculation
* Affirms music download is not a public performance
By Grant McCool
NEW YORK, Sept 28 The fees paid by Yahoo Inc
(YHOO.O) and RealNetworks Inc (RNWK.O) for licenses to play
music over the Internet should be recalculated, a U.S. appeals
court ruled on Tuesday.
Ruling on a separate issue, the court, a three-judge panel
of the 2nd U.S. Circuit Court of Appeals in New York, agreed
with a lower court's 2007 decision "that a download of a
musical work does not constitute a public performance of that
work" under copyright law.
Yahoo! and RealNetworks had sought separate blanket
licenses to publicly play the entire repertory of the American
Society of Composers, Authors and Publishers (ASCAP) on some of
their websites and services.
ASCAP appealed the ruling that a music download does not
constitute a public performance, and the Internet companies
appealed the lower court's assessment of fees for the blanket
More than 390,000 composers, songwriters, lyricists, and
music publishers in the United States exclusively license their
music through ASCAP, according to the not-for-profit
organization. ASCAP licenses about 45 percent of all of the
musical works that are played online, according to the court
The panel said the analysis by a U.S. district court in
Manhattan in determining the fees in 2008 was flawed in two
major respects and sent it back for reconsideration.
Representatives of the two companies and ASCAP could not
immediately be reached to comment.
"First, the district court did not adequately support the
reasonableness of its method for measuring the value of the
Internet companies' music use," said the written opinion by the
It added that the lower court "did not adequately support
the reasonableness" of applying a uniform royalty rate of 2.5
percent to the Internet companies' music-use revenue.
The calculation was made by multiplying the total revenue
from licensed services by a music-use-adjustment factor, a
fraction that reflected the amount of time users spent
streaming performances of music relative to their overall time
on the website, according to the court record.
A dispute also arose between the parties over whether
digital downloads, or copies of the music, are also public
performances for which the copyright owners must be
In agreeing with the lower court ruling on that issue, the
panel cited a section of the Copyright Act stating that to
"perform" means to recite, render, play, dance or act it either
directly or through a device or process.
"Music is neither recited, rendered, nor played when a
recording (electronic or otherwise) is simply delivered to a
potential listener," the panel's opinion said.
The case is USA v American Society of Composers, Authors
and Publishers et al, U.S. Court of Appeals for the 2nd Circuit
(Reporting by Grant McCool; Editing by Steve Orlofsky)