The U.S. Court of Appeals for the Second Circuit affirmed a district court judgment that an internet radio service was not an “interactive service” within the meaning of the Digital Millennium Copyright Act (DMCA) and hence was not liable for copyright infringement for failure to pay license fees. Arista Records, LLC, et al. v. Launch Media Inc., 2009 U.S. App. LEXIS 18843 (2nd Cir., Aug. 21, 2009) (Wesley, J.).

Arista Records, Bad Boy Records, BMG Music and Zomba Recording LLC (collectively, BMG) sued Launch Media, claiming that Launch’s internet radio website, or “webcasting” service, LAUNCHcast was an “interactive service” under the DMCA, and, therefore, Launch Media was required to obtain individual licenses from BMG to play BMG’s sound recordings. After the district court denied cross motions for summary judgment motion, the jury found for Launch Media. BMG appealed.

In order to determine whether LAUNCHcast qualified as an “interactive service” under the DMCA as a matter of law, the Second Circuit considered the legislative history of copyright protection for sound recordings. Congress first extended copyright protection to sound recordings in the 1971 Sound Recording Act, which did not include a right of performance. Then in 1995, Congress passed the Digital Performance Right in Sound Recordings Act, granting sound recording copyright holders an exclusive, but “narrow,” right to broadcast sound recordings via digital audio transmissions through paid subscriptions services and “interactive services.” Finally in 1998, Congress passed §114 (j)(7) of the DMCA, expanding “interactive service” to include “those that are specially created for a particular individual.” Section 114 (j)(7) was aimed at preventing the loss of record sales resulting from the availability of interactive digital media that would provide consumers with a degree of control which would reduce their need to purchase music.

The Second Circuit analyzed the LAUNCHcast service to determine whether it would provide a substitute for purchasing records. The court found that while LAUNCHcast does provide users with music tailored to their preferences, it does not provide sufficient control to users such that users would choose it over purchasing music, noting that users have almost no ability to control or predict the specific songs pooled for selection to a their playlist. Further, the selection of songs for the playlist is governed by rules that prevent the users’ explicitly rated songs from being anywhere near a majority of the songs on the playlist, and LAUNCHcast does not allow users to view the unplayed songs on the playlist, therefore users cannot choose the songs they wish to hear.