ASCAP Loses Major Ringtone Royalty Cases Against Verizon, AT&T

Film Music Magazine • October 21, 2009

In what could prove a major financial loss for composers and songwriters, a federal judge rejected ASCAP’s claims against Verizon and AT&T that downloading ringtones and the playing of ringtones on customer’s phones constitutes public performances of music and should be subject to performance license fees.

In the federal rate court proceeding against Verizon, ASCAP argued that Verizon engaged in the public performance of musical works when it downloads ringtones to customers, and argued that Verizon was directly and secondarily liable for public performances of musical works when customers play ringtones on their telephones.

In her opinion, Judge Denise Cote in a 34-page summary judgment said that, “Despite the accusation that Verizon enjoys revenue from publicly played ringtones, Verizon makes no revenue from the playing of ringtones, in public or elsewhere.” Cote continued, “It makes revenue from selling ringtones, and it already pays a mechanical licensing fee in connection with those sales.” Cote pointed out that Verizon pays a mechanical royalty of 24 cents per each download of a ringtone for the reproduction and distribution of their musical works, more than two times the mechanical royalty rate it pays for permanent downloads of entire songs through sites such as iTunes.

Regarding customers playing ringtones on their telephones, Cote quoted Section 110(4) of the U.S. Copyright Act which exempts public performances undertaken “without any purpose of direct or indirect commercial advantage.” Cote said that, “customers do not play ringtones with any expectation of profit,” and ruled that, “when a ringtone plays on a cellular telephone, even when that occurs in puiblic, the user is exempt from copyright liability, and Verizon is not liable either secondarily or directly.”

ASCAP spokesman Phil Crosland told Film Music Magazine late Wednesday that, “While ASCAP is disappointed with the ringtones summary judgment issued by the US District Court, this Federal Rate Court proceeding with mobile providers is about much more than just ringtones. We have always pursued fair payment for individual music creators whose creative works are used to build the businesses of others and that effort will certainly continue.”

ASCAP did not answer questions regarding whether ASCAP will be refunding any license fees the organization has collected from various cellular carriers since 2001 for ringtones, what the cost to ASCAP members was of the failed ringtone litigation, and why ASCAP pursued the litigation alone as opposed to proceeding in joint actions with fellow U.S. societies BMI and SESAC.

“This ruling is a win for consumers and innovation,” wrote Andrew McDiarmid, a policy analyst at the Center for Democracy and Technology. “The court has rejected an undue expansion of the public performance right and licensing costs, preserving the ability of consumers to make private uses of the music they legally purchase.”


By Brian on October 22nd, 2009 at 7:49 pm

A triumph of sanity and justice.

Where’s Connor?

By Brian on November 4th, 2009 at 6:21 pm

Interesting that ASCAP doesn’t place this NEWS on their website.

Reimer strikes out, again.

By Brian on November 4th, 2009 at 6:24 pm

One more: Hurray for Denise!


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