Court Rules Playlists Based On Preference Not 'Interactive'
Handing Yahoo a victory against Sony BMG, a federal appeals court ruled that Yahoo's Launch music service wasn't an "interactive" service for purposes of assessing copyright royalties.
The decision, issued late last week by the Second Circuit Court of Appeals, upholds a jury verdict in Yahoo's favor. Had the case turned out differently, Yahoo, which purchased Launch in 2001, could have owed Sony more than $100 million for copyright infringement.
The case resolves a dispute dating back to 1999, when Launch first began creating customized playlists for users based on information about their music preferences. Had that service been considered interactive, Launch would have been required to license each track it streamed from the record labels. But companies that stream music in a non-interactive manner need only pay rates set by the Copyright Royalty Board.
In 2001, labels owned by Sony sued Launch, arguing that the company infringed on the record labels' copyright by streaming tracks without licenses.
But the appellate court ruled that the service wasn't interactive -- meaning that Launch had no obligation to obtain licenses from the labels. The court reasoned that creating playlists of recommended songs didn't threaten music sales because users couldn't pick and choose which songs they heard. "LaunchCast 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,' "the appellate court wrote.
Yahoo no longer offers the type of customizable playlists that were at issue in the case, according to a company spokeswoman.