MobiTV litigation helps clarify cost structure of mobile content distribution
May 20, 2010
Will justice be served?
A streaming media case has been resolved in favor of MobiTV, which is game-changing both for the company and the entire mobile content industry.
The case focused on MobiTV and its dispute with the American Society of Composers, Authors and Publishers (ASCAP). It was over reasonable royalties for a license covering the public performance of ASCAP musical compositions by MobiTV's mobile and Internet television/radio services.
“This case exists under antitrust agreements having to do with licenses rights for composers and publishers,” said Kenny Steinthal, the attorney that represented MobiTV from Greenberg Traurig, San Francisco. “There are certain regulations under which ASCAP has to operate and one constraint is on pricing power.
“If ASCAP and a potential licensee disagree on a licensing fee, either can trigger a litigation to have a court determine a reasonable fee,” he said. “In this case MobiTV was asking for a reasonable fee and the court rejected ASCAP’s model and adapted ours.”
Mr. Steinthal said this decision is the first to address the royalty structure for music performance rights associated with the transmission of television/radio content to mobile devices.
The decision is significant and likely will have ramifications for the mobile content industry as a whole.
The Opinion and Order issued by the United States District Court for the Southern District of New York, in regards to the application of MobiTV, 09 Civ. 7071 (DLC), categorically rejected ASCAP's proposed licensing structure.
If the court would have sided with ASCAP, it would have received more than $41 million in fees from MobiTV alone for the period from its launch through 2011.
The court instead adopted MobiTV's proposal in its entirety, establishing a framework for MobiTV's ASCAP fees that draws upon the licensing framework ASCAP has applied to cable television networks for more than a decade.
As a result, fees due to ASCAP from MobiTV are less than 2 percent of what ASCAP sought.
Ultimately, MobiTV believes this case will help clarify the cost structure of mobile content distribution, which is an issue in the industry.
The decision establishes a clear framework for licensing that industry participants such as channel suppliers, aggregators and carriers can incorporate into their contractual distribution arrangements.
Additionally, the decision may have positive implications for several cases awaiting resolution by the ASCAP Rate Court, including ones involving major wireless carriers, operators of Internet streaming services and major cable and broadcast TV and radio networks/stations."
“The decision certainly has a significant positive impact for us for obvious reasons and has positive impact for the industry,” said Bill Losch, chief financial officer at MobiTV, Emeryville, CA. “We completely agree that a fair price should be paid for content.
“We had a significantly different view of what that model should be,” he said. “To a great extent we thought that it should be similar to the model for cable TV.
“We are leader of media to mobile. We needed to take a stand on this.”
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