ASCAP’s ringtone squeeze play

The mobile-phone industry has jumped into a major Internet music rate case in a New York federal court. The outcome could determine whether cellular carriers, and thus subscribers could be forced to pay more-actually twice-for downloading ringtones.
It’s not a rinky-dink matter. Ringtones, while perhaps not as wildly popular as they were several years back, still ring up hundreds of millions of dollars in annual sales in the U.S. (It’s about a $5 billion market worldwide). Generally speaking, consumers’ fluid and fickle whims make mobile content tricky business for cellular carriers. That interest in ringtones has waned is the result of pure, unadulterated market forces. Consumers rule, right?
Not necessarily. If the American Society of Composers, Authors and Publishers gets its way, mobile-phone carriers could have to pay record labels and aggregators twice for ringtones. Carriers already reimburse music publishers and their songwriters via “mechanical” royalties for ringtone downloads. The second charge would come about if a federal judge backs ASCAP’s contention that transmission of downloads of copies of musical works constitute compensable public performances as defined by U.S copyright law.
Cellphone association CTIA has joined AOL L.L.C., Yahoo Inc. and RealNetworks Inc. in arguing that ASCAP has it wrong.
“ASCAP is seeking royalties to which it is not legally entitled,” stated CTIA in a friend-of-the-court brief. “Moreover, ASCAP is seeking a construction of law that would discriminate against new means of distributing copyrighted works, and result in redundant fee setting proceedings, duplicative compensation, added costs to consumers, and extra burdens on the use of musical works, with no justifiable economic rationale.”
The mobile-phone industry compares ringtone download purchases with buying a CD at Borders.
No way, responds ASCAP.
“The emergence of the digital world is dramatically reshaping the way music is purchased and enjoyed,” said John LoFrumento, CEO of ASCAP. “We strongly believe that our members are entitled to be compensated for all Internet transmissions of their music to the public-including the public performance that is an essential part of a music download.”
Skilled copyright lawyers are geared up to do battle when the trial begins May 24. That’ll be some public performance itself.