Music Services to Surrender $100M to Songwriters?

Time Warner’s (NYSE: TWX) AOL unit, RealNetworks (NASDAQ: RNWK) and Yahoo (NASDAQ: YHOO) could stand to pay up to $100 million in royalties owed to thousands of songwriters and publishers, after a federal judge established a formula for determining the payments.

The move could force the three online services to pay royalties to the American Society of Composers, Authors and Publishers (ASCAP) worth 2.5 percent of their music revenue dating back to 2002, ASCAP said.

The decision by a judge in the U.S. District Court for the Southern District of New York sets a formula for potential license fees on songs played by the three online services from July 1, 2002, through December 31, 2009, the trade group said.

But Bob Kimball, the general counsel for defendant RealNetworks, said the federal court ruling provided only a framework for talks on potential royalties.

“This is a long way from being over,” Kimball said. “To be clear, the court did not award $100 million in royalties.”

Marilyn Bergman, the chairman of ASCAP, which has a membership of 320,000 songwriters and publishers, said the decision goes a long way to protecting writers’ and composers’ rights to be compensated fairly.

Bergman is an Academy Award–winning lyricist who has worked with Quincy Jones, Marvin Hamlisch and Frank Sinatra.

The ruling does not cover licensing rights held by music labels, ASCAP said.

Kimball of RealNetworks said the court had provided a “general and incomplete formula” that will require further negotiations to figure out how to apply it to different businesses.

He said an extended appeals process was likely once the trial court decision is final.

AOL and Yahoo representatives were not immediately available to comment.

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