DISTRICT COURT FOR SOUTHERN DISTRICT OF NEW YORK SETS ASCAP ROYALTY RATE FOR MUSIC PLAYED ON THREE MAJOR INTERNET-PROVIDER SITES - APRIL 2008

On April 30, 2008, the US District Court for the Southern District of New York set the royalty rate that three major internet providers must pay ASCAP for the use of ASCAP composers' compositions.

The US District Court decided the royalty rate issue, in this instance, because the involved parties could not agree on a royalty rate under prior royalty rate guidelines, which were first established in 1941. The royalty rate for the use of music compositions is normally set by a rate board, unless the parties cannot agree on a fair, and consistent, royalty rate for the use of artist compositions.

AOL, Yahoo, Real Networks, and the royalty rate board could not agree on a fair rate in earlier negotiations over the previous three years. In turn, the court stepped-in and set the royalty rate that the three major internet providers must pay ASCAP, for the use of its artists' compositions, at 2.5%.

The 2.5% royalty rate is in-line with other rates paid by other users, in other mediums. Perhaps more importantly, the rate-setting district court decision establishes guidelines for the way internet providers will be treated by the royalty board in the near future. [MORE SHORTLY]