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Score One for Sanity in Yahoo Music Webcast Ruling

The U.S. Second Circuit Court of Appeals just ruled in favor of Yahoo's appeal against punitive music royalty fees levied on its online Launchcast music service. Sounds bland? Nope—it may have a big impact on the online music industry.

Yahoo musicLaunchcast let its users cue-up songs they like into their own private "radio" station, streaming the music from the site to their PCs. The recording industry, pulling one of its famous Not Invented Here maneuvers, had previously legally pressured for Launchcast (and systems like it) to pay royalty fees on every track they "broadcast"—amounting to a significant enough financial burden that even the successful Pandora recently had to cap its free music streaming service to 40 hours per user, per month.

But Yahoo appealed the original copyright ruling, and Arista Records, Bad Boy Records, BMG Music, Capital Records, Motown Records, Virgin Records, and others (the plaintiffs in the case) have now lost their case. It's down to a subtlety, apparently—Judge Richard Wesley noted that "There is no general right of performance" in a copyright for a track, instead there's "only a limited right to performance of digital audio transmission." But the Launchcast system falls into one of "several exceptions to the copyright" thanks to its existence as a non-interactive service.

That subtlety means Launchcast's owner, Yahoo's Launch Media Inc. now only has to pay a single licensing fee to allow it to operate—and the hefty track-by-track royalty fees aren't relevant. Though Launchcast, operating within Yahoo Music, has since been taken over by CBS Radio, it's planning on bringing the personalized radio stations back...and this ruling completely frees-up the service to operate as intended. CBS also owns, a U.K.-based social music service that tracks the music you play and lets you recommend it to friends, as well as stream some of the songs like a radio station.

But the ruling's knock-on effect could be very significant—as a legal precedent it's opened a crack in the copyright law that may be able to be exploited by Pandora, Slacker radio and the host of other online music services. That sounds like a big score, in the long term, in favor of music fans (who one would think the recording industry would be supporting, in the first place?) who are getting their song fixes online. That's a trend that's currently booming, by the way. And it lets us bask in the delicious rareness of a headline on a piece like this where it's the recording industry in the losing position.

[via Reuters]