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ASCAP Music Licensing Fees Voided for Yahoo, RealNetworks

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SAN FRANCISCO, September 28, 2010 —  A U.S. rate-setting court’s formula for establishing the fees that Yahoo! and RealNetworks must pay the nation’s dominant music licensing group is fundamentally flawed because it uses inconsistent data sets and because the benchmarks it uses aren’t relevant or comparable, said a U.S. appeals court Tuesday.

“The district court did not adequately support the reasonableness of its method for measuring the value of the internet companies’ music use,” wrote Judge John M. Walker in the Tuesday opinion for the U.S. Court of Appeals for the Second Circuit on behalf of himself, Chief Judge Dennis Jacobs and Judge Debra Ann Livingston.

The judges also said that the rate court’s establishment of benchmarks using the rates cable companies and broadcast stations pay for licensing music was inappropriate because the nature and scope of the online companies’ use of music differed significantly.

“The district court did not adequately support the reasonableness of the 2.5% royalty rate applied to he value of the internet companies’ music use,” wrote Walker.

The judges also sided with Yahoo! when it faulted the rate court for relying on inconsistent sets of data sources for coming up with its music licensing formula. And they said that the rate court’s attempt to come up with a simple 2.5% across-the-board license for the two online services is imprecise, and does not take into account the different kinds of services that both Yahoo! and RealNetworks offer.

The three-judge panel also found that the rate court did not give enough of a rationale for basing its licensing fee formula on the amount of time a piece of music is streamed, rather than on page views, which is the primary driver of advertising revenue.

“The district court must follow an approach more tailored to the varying nature and scope of Yahoo!’s music use,” wrote Walker.

And Yahoo can’t be compared to television stations because its business isn’t as reliant on music as the television industry, argued the three judges.

“Nearly every program on a television station somehow utilizes musical works,” wrote Walker. “In contrast, only a fraction of the traffic on Yahoo!’s web site uses music — much of Yahoo!’s web site does not implicate any music whatsoever. Given that Yahoo!’s revenue base relies far less on ASCAP content than the television networks’ revenue base, we believe that comparing percentages of overall revenue bases is of little probative value in this benchmark analysis.”

ASCAP stands for the American Society of Composers, Authors and Publishers. It’s responsible for licensing 45% of the legal music online and represents 295,000 people in the music business.

The judges pointed to Yahoo!’s more specific licensing terms with BMI, another licensing body, for the different kinds of uses of music as an example of how licensing agreements can be more reflective of the nature of the use of the music.

ASCAP’s agreements with Turner Broadcasting for its various cable stations also accommodate different kinds of licenses depending on how each station uses music, noted Walker.

The appellate court did agree with the lower court on one separate, but key issue in this case that was also on appeal: That downloads do not constitute a public performance of a work as defined under current copyright law.

“Jimmy Hendrix memorably (or not, depending on one’s sensibility) offered a “rendition” of the Star-Spangled Banner at Woodstock when he performed it aloud in 1969,” Walker wrote.  Yo-Yo Ma “plays” the Cello Suite No. 1 when he draws the bow across his cello strings to audibly reproduce the notes that Bach inscribed. Music is neither recited, rendered, nor played when a recording (electronic or otherwise) is simply delivered to a potential listener.”

Copyright

Public Knowledge Celebrates 20 Years of Helping Congress Get a Clue on Digital Rights

Derek Shumway

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Screenshot of Gigi Sohn from Public Knowledge's 20th anniversary event

February 27, 2021 – The non-profit advocacy group Public Knowledge celebrated its twentieth anniversary year in a Monday event revolving around the issues that the group has made its hallmark: Copyright, open standards and other digital rights issues.

Group Founder Gigi Sohn, now a Benton Institute for Broadband and Society senior fellow and public advocate, said that through her professional relationship with Laurie Racine, now president of Racine Strategy, that she became “appointed and anointed” to help start the interest group.

Together with David Bollier, who also had worked on public interest projects in broadcast media with Sohn, and is now director of Reinventing the Commons program at the Schumacher Center for a New Economics, the two cofounded a small and scrappy Public Knowledge that has become a non-profit powerhouse.

The secret sauce? Timing, which couldn’t have been better, said Sohn. Being given free office space at DuPont Circle at the New America Foundation by Steve Clemmons and the late Ted Halstead, then head of the foundation, was instrumental in Public Knowledge’s launch.

The cofounders met with major challenges, Sohn and others said. The nationwide tragedy of September 11, 2001, occurred weeks after its official founding. The group continued their advocacy of what was then more commonly known as “open source,” a related grandparent to the new “net neutrality” of today, she said.

In the aftermath of September 11, a bill by the late Sen. Ernest “Fritz” Hollings, D-S.C., demonstrated a bid by large copyright interest to force technology companies to effectively be the copyright police. Additional copyright maximalist measures we launched almost every month, she said.

Public Knowledge grew into something larger than was probably imagined by the three co-founders. Still, they shared setbacks and losses that accompanied their successes and wins.

“We would form alliances with anybody, which meant that sometimes we sided with internet service providers [on issues like copyright] and sometimes we were against them [on issues like telecom],” said Sohn. An ingredient in the interest group’s success was its desire to work with everyone.

Congress didn’t have a clue on digital rights

What drove the trio together was a shared view that “Congress had no vision for the future of the internet,” explained Sohn.

Much of our early work was spend explaining how digitation works to Congress, she said. The 2000s were a time of great activity and massive growth in the digital industry and lawmakers at the Hill were not acquainted well with screens, computers, and the internet. They took on the role of explaining to members of Congress what the interests of their constituents were when it came to digitization.

Public Knowledge helped popularize digital issues and by “walking [digital information] across the street to [Capitol Hill] at the time created an operational reality with digitization,” said Bollier.

Racine remarked about the influence Linux software maker Red Hat had during its 2002 initial public offering. She said the founders of Red Hat pushed open source beyond a business model and into a philosophy in ways that hadn’t been done before.

During the early days of Public Knowledge, all sorts of legacy tech was being rolled out. Apple’s iTunes, Windows XP, and the first Xbox launched. Nokia and Sony were the leaders in cellphones at the time, augmenting the rise of technology in the coming digital age.

Racine said consumers needed someone in Washington who could represent their interests amid the new software and hardware and embrace the idea of open source technologies for the future.

Also speaking at the event was Public Knowledge CEO Chris Lewis, who said Public Knowledge was at the forefront of new technology issues as it was already holding 3D printing symposiums before Congress, something totally unfamiliar at the time.

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In Google v. Oracle, Supreme Court Hears Landmark Fair Use Case on Software Copyright

Jericho Casper

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Photo of Tom Goldstein from the Peabody Award used with permission

October 12, 2020 – The Supreme Court on Wednesday publicly struggled with the copyrightability of software in a uniquely contested case between Google and Oracle, the outcome of which could play a significant role in the future of software development in the United States.

The oral arguments were the culmination of a battle that started 10 years ago, when tech company Oracle accused Google of illegally copying its code. Oracle owns the copyright to the Java application programming interface that Google utilized to establish a new mobile operating system.

The company has sued Google for more than $9 billion in damages.

Yet Google claimed a “fair use” defense to its copying. Google copied less than 1 percent of the Java code. Even though the law generally treats computer programs as copyrightable, Google’s attorney before the Supreme Court, Thomas Goldstein, said that by adapting Oracle’s code to serve a different purpose, Google’s use was “transformational,” and entitled to fair use protections.

Goldstein said that this form of unlicensed copying is completely standard in software, and saves developers time and lowers barriers to innovation.

He referenced a famous Supreme Court precedent about public domain works, Baker v. Selden, which in 1880 declared that once information is published to the public, the public has a right to use it.

“Google had the right to do this,” said Goldstein.

Still, Oracle attorney Joshua Rosenkranz asserted that the Java code is an expressive work eligible for copyright protections. Rosenkranz further argued that Google’s use of the code was not transformational.

Justice Sonia Sotomayor appeared to suggest that jurors in the lower court case properly found Google’s use to be transformational because it took the APIs from a desktop environment to smartphones.

“Interfaces have been reused for decades,” said Goldstein. Google had to reuse Oracle’s code to respond to interoperability demands.

“It has always been the understanding that this purely functional, non-creative code that is essentially the glue that keeps computer programs together could be reused, and it would upend that world to rule the other way,” he said.

Supreme Court observers said that the high court appeared leaning toward upholding the 2016 jury verdict vindicating Google’s fair use defense.

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Copyright

Fair Use is Essential But its Enforcement is Broken, Says Senate Intellectual Property Subcommittee

Elijah Labby

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Screenshot of Grammy-winning recording artist Yolanda Adams from the hearing

July 28, 2020 — “Fair use” is an essential doctrine of copyright law that is unevenly applied, said participants in a Senate Intellectual Property Subcommittee hearing Tuesday.

The hearing, “How Does the DMCA Contemplate Limitations and Exceptions Like Fair Use,” saw participants discuss whether the Digital Millennium Copyright Act still permits fair uses of copyrighted content that would be otherwise infringing.

The DMCA, passed in 1998, criminalizes the manufacture, sale or other distribution of technologies designed to decrypt encoded copyrighted material. This ban on anti-circumvention tools does not appear to account for fair use.

The fair use exception to copyright law allows the republication or redistribution of copyrighted works for commentary, criticism or educational purposes without having to obtain permission from the copyright holder.

However, Joseph Gratz, partner at Durie Tangri, said that fair use often clearly applies but is not enforced, leaving users of the legally obtained content to deal with automated content censors.

“Fair use depends on context, and machines can’t consider context,” he said. “A video, for example, that incidentally captures a song playing in the background at a political rally or a protest is clearly fair use but may be detected by an automated filter.”

When an automated filter detects a song on a platform like YouTube, it redirects advertising revenue from the creator of the video to the creator of the song, often erroneously.

Rick Beato, who owns a music education YouTube channel with over one-and-a-half million subscribers, said that he does not receive ad revenue from hundreds of his videos.

“One of my recent videos called ‘The Mixolydian Mode’ was manually claimed by Sony ATV because I played ten seconds of a Beatles song on my acoustic guitar to demonstrate how the melody is derived from the scale,” he said. “This is an obvious example of fair use, I would argue.”

Grammy-winning recording artist Yolanda Adams testified that she sees the problems of fair use employment as about more than simply receiving money.

“As a gospel artist, I’m not just an entertainer,” she said. “I see my mission as using my gift to spread the gospel — so for me, fair use is not just about money. It’s about access.”

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