Internet Companies Ordered to Pay Royalties as High as $100 Million

By May 06, 2008
Keywords : Smart city, usage

A San Francisco Judge has set royalties for Internet music that could reach as high as $100 million.   U.S. District Judge William Conner has ordered Time Warner Inc.’s AOL, Yahoo, and RealNetworks to disburse royalties for music

associated with their Web sites that helped drive traffic and, consequently, increase revenue.   The American Society of Composers, Authors and Publishers have been campaigning to receive such royalties dating back to 2002, claiming that its 320,000 members were not properly compensated for their efforts with the three large Internet companies.   Although slightly less than what the ASCAP was seeking, Judge Conner’s ruling puts the price greatly higher than any of the companies wanted to pay.   His ruling determines that from 2006, AOL owes $5.95 million, and Yahoo owes $6.76 million. Based on court documents, AOL envisioned paying around $630,000 and Yahoo around only $880,000.   The ASCAP hoped for $7.83 million from AOL and $7.38 million from Yahoo.   The billing is by year for each of the companies, with AOL’s royalties’ disbursement dating back to 2005, Yahoo to 2002, and RealNetworks to 2004. The Internet music royalties depend on how much music was used or streamed each year on the companies’ Web sites.   The Judge also outlined a formula by which the companies will pay royalties, and the formula will also account for music used between 2007 and 2009.   "This historic decision, for the first time, provides a clear framework for how the online use of musical works should be appropriately valued," said John LoFrumento, ASCAP's chief executive.   Although the ruling does not affect record companies and the long debate concerning online music revenue, it does signal a change in online music usage by Internet companies.   By Danny Scuderi   FEEDBACK For comments on this article, email us at

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