Framework for Mobile TV Music Royalties Seen in Rate Court Decision

A recent decision by a federal judge in New York setting the royalties MobiTV is to pay ASCAP for use of songs that are part of the TV programming it distributes over wireless networks has brought a level of certainty to the mobile TV field and should help spur future business deals, MobiTV CEO Charlie Nooney said. “It’s a real watershed moment for the industry,” he said. “It puts mobile in the same category as cable TV or satellite TV, where it should be."

After failing to reach an agreement on their own, ASCAP and MobiTV went to rate court under the terms of a antitrust consent decree the performance rights organization operates under. ASCAP wanted 2.5 percent of some of the revenue wireless carriers generate from offering MobiTV services. But U.S. District Judge Denise Cote in Manhattan said ASCAP wanted too high a percentage of too wide a revenue pool.

ASCAP sought a piece of the wireless carriers’ overall data revenue, court documents show. It also proposed that carriers should pay the bulk of the license fees in one alternative fee structure it submitted to the court. Instead, the rates set by the court are based on the fees MobiTV pays to programmers and mirrors the variable percentage fee structure other pay-TV platforms use. “Because ASCAP chose a vastly inflated revenue base, it faced the Herculean task of contracting that base through a series of calculations,” Cote wrote. “Each of those layers of calculations was layered with unsupported and faulty assumptions."

ASCAP’s initial demands were too high, the court said. Under ASCAP’s rate plan, MobiTV would have owed it $41.3 million for the period between 2003 and 2011 and probably would have owed the same amount to BMI, another performance rights organization. Because ASCAP was seeking such high rates, programmers were reluctant to take on those costs, said lawyer Kenneth Steinthal of Greenberg Traurig, representing MobiTV. “Everybody was trying to push the obligation onto someone else,” he said. “With all this uncertainty, the channel providers of MobiTV were saying, ‘I don’t want to be responsible for this. I don’t know what it’s going to be.'"

Now that the ASCAP rates are set, royalty talks with BMI should be easier, Steinthal said. “ASCAP and BMI often watch each other,” he said. “It would be quite surprising if BMI took a position that would suggest they were entitled to something ASCAP wasn’t entitled to.” ASCAP told its members it’s examining the decision to determine what MobiTV actually owes. It said Cote’s decision confirmed “ASCAP’s right to compensation and provides future direction in the licensing of our members’ music for new media.”