ASCAP is now attempting to claim that both a mechanical royalty and a performance royalty are owed for digital downloads.
U.S. copyright law grants musical works rights holders various exclusive rights, including the right to reproduction and the right to public performance.
Songwriters are owed mechanical royalties for copies made and performance royalties for public performances of their songs. ASCAP collects performance royalties on behalf of its member composers, songwriters, lyricists and music publishers.
The worlds of performance royalties and mechanical royalties are not meant to collide. For example, a CD is a reproduction deserved of a mechanical royalty and radio play is a public performance deserved of a performance royalty. ASCAP, however, is now attempting to claim that both a mechanical royalty and a performance royalty are owed for digital downloads.
How can this be? According to the ASCAP Internet licensing department, the transmission of the download from an online retailer's server to a personal computer is a public performance.
Whereas, the saving of the file to one's hard drive is a reproduction of the musical work. Although the reproduction aspect is entirely logical, as a copy is being made, the performance aspect is entirely illogical. Where is the public performance? A digital download is merely a new mechanism for delivery of a copy of the musical work. There is no performance.
Under ASCAP's flawed rationale, any delivery could be considered a public performance, such as amazon.com mailing a CD to a customer. And while ASCAP does not expect to collect a performance royalty for music sent through the mail, it does expect to collect a performance royalty for music sent through the Internet.
ASCAP's definition of a digital public performance is not supported in the industry. SoundExchange, the collection society appointed by Congress to collect digital performance royalties for sound recording rights holders, does not collect performance royalties on digital downloads.
Furthermore, BMI, ASCAP's biggest competitor, in its contractual definition of gross revenues (used for computing performance royalties owed) does not include digital download revenues.
Considering a download as a public performance simply makes no sense and it is doubtful that major digital retailers will allow ASCAP's definition to prevail.
Unfortunately, small digital retailers, looking to produce a legal website that fairly compensates copyright holders, face a non-negotiable pdf-contract from the ASCAP website with its inflated, unjustifiable rate scheme. What a joke.
Cole Sternberg, a 3L at American University, Washington College of Law, was a finalist in this year's Entertainment Law Initiative legal writing contest, co-sponsored by the Grammy Foundation and the American Bar Assn.