ASCAP, a performance rights organization, initiated a royalty rate proceeding in the fall of 2005, asking a federal court to set royalty rates for "performances" of digital music by AOL, Yahoo! and RealNetworks.

In March 2007, ASCAP filed a cross-motion asking the Court to rule that all digital music downloads are "public performances" and should, therefore, be subject to public performance license fees and royalty payments.

Performance rights organizations, such as ASCAP, BMI, and SESAC, collect license fees on behalf of their member songwriters, composers and music publishers and distribute the fees as royalties to those members whose works have been performed. For instance, they collect license fees from radio stations, restaurants, retailers, and other entities that plays music in public. The license fees are then paid to the various publishers and authors associated with the particular musical composition.

The exclusive rights granted to an author of a creative work are enumerated in Section 106 of the Copyright Act, 17 U.S.C. Section 106. The exclusive rights that apply to musical works are (1) the right "to reproduce the copyrighted work in copies or phonorecords," (2) the right "to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending," (3) the right "to perform the copyrighted work publicly," and (4) the right "to perform the copyrighted work publicly by means of a digital audio transmission." Each of these rights is licensed separately and under different licensing structures, and thus the applicability of each right must likewise be determined individually.

ASCAP asserts that downloading a digital music file on a computer is a "public performance," for which it and its members are owed a license fee. Digital music services counter that downloading is a "reproduction," for which they have already compensated the copyright owner and, therefore, ASCAP is trying to "double-dip." Until now, digital music services have only paid royalties for "reproducing" the recorded compositions that were downloaded.

The question of whether downloading a song means that there is a "public performance" of a composition is certain to be one of the most hotly contested copyright issues this year.

The trial is scheduled to begin May 21, 2007 in the United States District Court for the Southern District of New York, but a ruling on this important issue, raised on cross-motion, could come sooner.