When most of us anticipate a public performance of music, we expect to actually hear that music. In its pursuit of licensing fees on downloaded music, however, the American Society of Composers, Authors and Publishers (ASCAP) takes a much broader view of the term. The U.S. Court of Appeals for the Second Circuit weighed in on the matter in U.S. v. ASCAP.

Download Providers Score

Yahoo! and RealNetworks provide music content in various ways via their websites, including allowing users to download music from an online server to their respective hard drives. Users can’t hear the music during the downloading process but they may play the music after saving it to a hard drive.

ASCAP licenses the public performance rights in copyrighted musical works by more than 400,000 U.S. composers, songwriters, lyricists and music publishers. Yahoo! and RealNetworks both sought blanket ASCAP licenses to publicly perform the entire ASCAP repertory for a single fee regardless of how much repertory music is actually used. After negotiations for the licenses failed, ASCAP applied to the U.S. District Court for Southern New York for a determination of reasonable fees for the licenses. To the organization’s chagrin, the court held that the downloading of a digital file containing a musical work didn’t constitute a public performance of that work and therefore Yahoo! and RealNetworks didn’t need to obtain public performance licenses for their download services. Not surprisingly, ASCAP appealed.

The Issue at Hand

The federal Copyright Act provides copyright owners several exclusive rights, including the right “to reproduce the copyrighted work in copies” and the right “to perform the copyrighted work publicly.” The parties agreed that downloads of songs create copies, or reproductions, for which the relevant copyright owners must be compensated.

The issue on appeal was whether these downloads are also public performances of the musical work, for which the copyright owners must separately and additionally be compensated. Under Section 101 of the Copyright Act, “to perform” a work “means to recite, render, play, dance, or act it, either directly or by means of any device or process.”

Music to Their Ears

The Second Circuit found that a download of a musical work is plainly neither a “dance” nor an “act.” In considering whether a download falls within the meaning of the terms “recite,” “render” or “play,” the court determined that the ordinary sense of the words refers to actions that can be perceived contemporaneously.

For example, celebrated cellist Yo-Yo Ma “plays” a piece of music “when he draws the bow across his cello strings to audibly reproduce the notes.” In the case of downloading songs, though, the user must take some additional action to play the song after it’s downloaded. The download itself involves no recitation, rendering or playing of the musical work and, thus, isn’t a performance of that work.

The Second Circuit took pains to distinguish between downloading and streaming. A stream is an electronic transmission that renders the musical work audible as it’s received by the user’s computer’s temporary memory. The court found that a streaming transmission, like a television or radio broadcast, is a performance because the song is played — and, thus, perceived — simultaneously with the transmission. Downloads, on the other hand, are transmitted at one point in time and performed at another.

The court also distinguished this case from one involving a satellite television provider that captured protected content in the United States from the NFL, transmitted it to a satellite (“the uplink”) and then transmitted the content from the satellite to subscribers in Canada. The Second Circuit had characterized that unauthorized uplink as a public performance. ASCAP pointed out that the uplink wasn’t contemporaneously perceptible, but the court countered that it was an integral part of the larger process by which the NFL’s protected work was delivered to a public audience — the immediately sequential downlink from the satellite was a public performance.

A Critical Note

While the court’s ruling was good news for Yahoo! and RealNetworks, remember that it’s limited to downloads that cannot be simultaneously perceived by a user. If a user can listen to or see a file during its download, the service provider may well need to obtain the appropriate license for the public performance of the work.

Sidebar: Court Tosses Fee Formula for Streaming Music

In U.S. v. ASCAP (see main article), the district court set a royalty rate for Yahoo!’s and RealNetworks’ other online musical services at 2.5% of “music-use revenue.” This was determined by a formula based on the amount of time a user spent streaming music relative to the overall time spent on the respective website. In casting aside the district court’s rate, the Second Circuit held that a royalty rate should reflect the varying values of the companies’ different music uses — from minor use in video games and ring tones to more significant use in music videos and streaming radio stations.

The appellate court also rejected the district court’s method for measuring the value of the companies’ music use. In particular, it found it unreasonable to use streaming time to determine Yahoo!’s music-use revenue, because most of the company’s revenue comes from advertising, which is driven by the number of page views rather than streaming time.

Ultimately, the court vacated the district court’s assessment of reasonable fees for the blanket licenses and remanded the issue for further consideration.

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