License fees that AOL, RealNetworks and Yahoo! must pay to ASCAP for streaming music of the performing rights organization's members have now been set by a federal court judge.

The three services, which are parties to a rate-setting proceeding in a
federal District Court in New York, may obtain a non-exclusive blanket license from ASCAP for unlimited performances of all songs in the PRO's repertoire through Dec. 31, 2009.

The fee for the license is 2.5% of the service's "music-use-adjusted
revenue."

Music-use-adjusted revenue is determined by multiplying the total revenue of the licensed business unit (i.e., the digital service's business unit that streams music or other content that includes music), less customary deductions for advertising sales commissions and traffic acquisition costs, by a music-use adjustment fraction.

That fraction is determined by using as a numerator the total number of hours music is streamed to users by the service (as currently measured by each service) and by using as a denominator the total number of hours of use of the service's Web site (as measured by comScore or other means approved by the court).

"This historic decision, for the first time, provides a clear framework for how the online use of musical works should be appropriately valued," says ASCAP CEO John LoFrumento. "This decision also provides clear validation of the flexibility and applicability of the ASCAP blanket license model relative to the use of musical works on the Internet - something the court itself specifically noted in its written decision."

The 153-page decision was made public late yesterday.