In a ruling released last week, a US District Court Judge issued a ruling finding that a download of a recorded musical work does not give rise to a "public performance" requiring a payment to ASCAP, BMI or SESAC. If this decision is upheld on appeal, it could mean that one less fee would have to be paid in connection with on-demand downloads – which would also affect podcasts and video downloads made available by broadcasters on their websites. However, there are many issues that must be understood about this ruling, so broadcasters should not impetuously rush to provide downloads and podcasts without first securing the bundle of rights necessary for such performances.
First, it is important to understand the issue that was presented in this case. The case did not involve streaming of programming – so it has no effect on Internet radio royalties. It involves only downloads – where a copy of a specific work is downloaded to a single consumer’s computer at the request of that consumer. This is what happens when a consumer buys a song from iTunes, or downloads a podcast made available by a broadcaster. There is no question that, to provide such a download or podcast containing music, a service needs to get permission from the copyright holder in the "sound recording," the song as recorded by a particular artist. This is typically received from the record company which holds the copyright. In addition, there is a requirement that the rights to the composition must be obtained for purposes of the making of the making of a "reproduction" and a "distribution" of the underlying composition. This is typically obtained from the publishing company or a clearinghouse such as the Harry Fox agency. A service that provides downlaods of music can alternatively pay a statutory royalty for the composition, though that requires following a somewhat cumbersome process of filings set out by the Copyright Office and requiring specific notice to the copyright holder in the publication.
The question in this case was whether there was also an obligation to pay ASCAP (and, by extension, BMI or SESAC) for the right to "publicly perform" the composition. The public performance right is the one that is implicated when a musical work is played to the public at large, as is the case if a song is played on the radio, streamed by an Internet radio station, played over the loudspeaker at a football stadium or played by a DJ at a dance club. The Performing Rights Organizations (ASCAP, BMI, SESAC) had claimed that the digital download of a composition was like the streaming of an Internet radio station (as the consumer could usually begin to immediately listen to the song that was being downloaded) and thus included a public performance just as streaming does, while the Internet service companies involved in the case argued that a download was just an electronic way of making a record or CD, which involve the reproduction right, but not a public performance. These services argued that, in effect, the publishing companies would be paid twice (once for the reproduction right and then again for the performance) if the position of the PROs was adopted. The Judge sided with the services.
Whether or not there is a public performance in a download has been a long debate. Representatives of the Copyright Office have testified before Congress that they did not see the public performance, but the statutory language was ambiguous, so the debate has raged on. Various legislative remedies have been proposed, though none had passed. Even with the controversy, the PROs have made available license agreements for downloads and podcasts despite the dispute, and some services have signed them thinking that a royalty was due. This Judge’s decision may not end the dispute, as it would seem that an appeal would be likely, but the decision does at least bring this issue closer to an ultimate resolution.