AMERICAN SOCIETY OF COMPOSERS v. MobiTV, Inc.
681 F.3d 76
| 2d Cir. | 2012Background
- ASCAP, under a consent decree AFJ2, must issue TTTA licenses and quote reasonable fees for performances, subject to rate court review.
- MobiTV acts as intermediary, delivering content to wireless carriers and collecting wholesale payments from providers and advertising revenue; it pays content providers per subscriber.
- Dispute: ASCAP sought ~$41 million; Mobi contested, arguing only ~$301,258 due for Nov 2003–July 2009; district court to determine reasonable rate under AFJ2 IX(D).
- District Court rejected ASCAP's proposed wholesale-based rate and adopted Mobi’s method, basing revenue on wholesale payments (content providers’ revenue) and Mobi’s own revenue for music videos, plus advertising, with tiered rates by content type.
- Resulting judgment set a $405,000 fee for Nov 2003–Mar 2010, far below ASCAP's proposed $15.8 million; court declined to use wireless carrier retail revenues as the base.
- On appeal, ASCAP challenged the revenue-base choice and related methodologies; this court affirmed the district court’s wholesale-revenue approach and the resulting rate scheme.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appropriateness of revenue base | ASCAP: retail revenue is the proper base under Music Choice II guidance. | Mobi: wholesale revenue (content providers’ payments and carrier revenues) better reflects value and is administratively superior. | Wholesale base appropriate; Music Choice II not controlling due to valid reasons for wholesale reliance. |
| Validity of derived-demand rationale | ASCAP contends derived-demand reasoning is unreliable for justifying wholesale base. | Court properly relied on derived demand linking wholesale payments to music value, as supported by Noll. | Court correctly employed derived-demand framework to justify wholesale revenue base. |
| Use of benchmarks and treatment of bundling | ASCAP argues benchmarks and bundling complicate valuation; retail-based analogies apply. | District Court reasonably mapped rates by content category (audio vs audiovisual) using ASCAP benchmarks and avoided faulty retail-proxy. | District Court’s benchmark approach and bundling considerations are valid; no reversible error. |
Key Cases Cited
- Music Choice II, 316 F.3d 189 (2d Cir. 2003) (retail revenue not universally controlling; wholesale vs. retail base considerations discussed)
- Music Choice IV, 426 F.3d 91 (2d Cir. 2005) (affirmed district court's use of wholesale revenues in some contexts; retail base not absolute)
- RealNetworks, 627 F.3d 64 (2d Cir. 2010) (monopolist market power; rate-setting requires fair market value assessment)
- ASCAP v. Showtime/The Movie Channel, Inc., 912 F.2d 563 (2d Cir. 1990) (rate-setting and value assessment principles in rate disputes)