Court-Ordered Valuation of Music
Licenses, Performance Rights in Music Copyrights, Wireless Streaming of
Copyrighted Content
American Society of Composers,
Authors and Publishers v. Mobitv Corp., 681 F.3d 76 (2d Cir. May 22, 2012). This case involved the efforts of MobiTV, a
provider of mobile content, to obtain reasonable royalty rates from ASCAP for a
blanket public performance music licensing.
Since ASCAP represents about half of the music copyright holders, it is
subject to court decrees known as “consent decrees” as the result of past
antitrust litigation. The consent decree
relevant to this action required ASCAP to negotiate and to set a reasonable royalty
rate. The consent decree provides that
the Southern District of New York may act as a “rate court” to determine a
reasonable royalty rate if negotiations fail.
In this case the Second Circuit affirmed the lower court’s setting a
reasonable royalty rate and determining the value of the licensed music based
on the rates MobiTV paid to obtain the licensed content, plus any advertising
revenues MobiTV received. The decision
is noteworthy because the Second Circuit permitted a measure of the music’s
value that permitted giving music away for free for a certain period of time
and basing revenues on payments derived from pay-per-subscriber contracts. ASCAP argued that a royalty based on the
price a consumer paid to receive a service provided a better measure of the
music’s value. The courts focused on
the difficulty in delivering content in a medium with literally no market for
some time and that the fact that additional per-subscriber payments would
provide rights holders with greater revenues as the audience grew. ASCAP sought $41 million for a six year
period. MobiTV argued that $300k was
reasonable. The Court awarded $400k,
relying heavily on MobiTV’s expert. A
significant victory for providers of content to wireless devices.
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