Yahoo! Inc. (NASDAQ:YHOO) has won a case in an appeals court that may help protect Internet radio stations from having to pay higher music royalties. This ruling is a blow to music labels such as BMG Music and Arista Records. The labels will not be given the right to demand Yahoo! LAUNCH Media to pay licensing fees for songs.
“It brings a great clarity to an area that has vexed innovators for a long time,” stated Digital Media Association Executive Director Jonathan Potter. “There’s been 10 years of litigation over this. Companies have been put out of business because of this issue.”
The appeals court determined that LAUNCHcast, the streaming music service through LAUNCH Media is not “interactive” enough to be considered for licensing fees. The appeals court said that LAUNCHcast does not have the predictability of songs that would cause listeners to stop buying music.
“LAUNCHcast’s listeners do not even enjoy the limited predictability that once graced the AM airwaves on weekends in America when ‘special requests’ represented love-struck adolescents’ attempts to communicate their feelings to ‘that special friend,’” stated the appeals court.
This decision came about eight years after Sony Music subsidiary decided to sue LAUNCH. A federal jury in Manhattan ruled in favor of LAUNCH in 2007 that rejected the music labels from receiving $100 million in damages.