• Structuring relationships between developers and publishers and the ownership issues that arise in development agreements, including work-for-hire, joint ownership and cross-licensing issues;
• Protecting against developer default or insolvency, including the pros and cons of source code escrow arrangements and the applicability of Section 365(n) of the Bankruptcy Code;
• How clearances and consents have become critically important with the increased incorporation in games of real world elements (cities, buildings, people, etc.) and third party IP (e.g. music, video clips, characters, logos, etc.), with an examination of recent case law (Kirby v. Sega and Grand Theft Auto/Pig Pen); and
• Strategies to maximize revenues from online and mobile games, including sponsored exclusive features and content, “in-game” ads, syndicated games, and tiered subscriptions.

The one-hour Webinar will also feature “live chat” functionality to enable viewers to ask questions and comment on the presentation in real-time.  Presentation materials will be available for download.

The Webinar will be held on September 16, 2009 from 1:00 pm to 2:00 pm EDT.  To register, click here.

Of course, in the alternative, AT&T claims that to the extent AT&T is not directly liable, secondary liability attaches via the doctrines of inducement, vicarious and contributory liability—essentially, liability for contributing to and benefiting from the unlawful performance of ringtones by AT&T customers. This argument is likely designed to cut against the exemption codified in the Copyright Act allowing the “performance of a nondramatic literary or musical work … to the public without any purpose of direct or indirect commercial advantage… if there is no direct or indirect admission charge.” (see 17 U.S.C. § 110(4)). This would, in theory, prevent ASCAP from proceeding against individual consumers who, although they may be publicly performing a musical work according to Copyright Act, are doing so without commercial advantage and thus not infringing.

ASCAP also reveals in its motion that it has consistently licensed other mobile carriers’ sale and distribution of ringtones, charging “2% of revenue and an alternative usage-based fee calculation.” In fact, ASCAP claims that prior to the Second Circuit’s 2007 decision that digital downloads of sound recordings do not trigger the public performance right (see United States v. ASCAP, 485 F. Supp. 2d 438 (S.D.N.Y. 2007)) (the “Download Decision”), “very few parties ever questioned or challenged ASCAP on the question of whether ringtones required public performance licenses.”

For business people and transactional lawyers alike, perhaps the most notable takeaway from ASCAP’s motion stems from AT&T’s claim that the ringtone providers (e.g., Jamster, ThumbPlay, etc.), not AT&T, “bear contractual responsibility for securing public performance rights.” In other words, AT&T is stating that if public performance royalties are due, it is the responsibility of content providers, aggregators, and ringtone creators to make payments to the performing rights organizations, not distributors like AT&T and other mobile carriers/network operators. Put simply, this contention highlights the need for parties to these types of agreements to be more explicit than ever about which party will be responsible for performance royalties if and to the extent any public performance rights are implicated. Here, AT&T is pointing the finger at the providers, and to the extent this tactic works, the providers would be responsible for paying royalties based not only on their own revenue, but the mobile carriers’ revenue, which, according to the ASCAP’s standard licensing agreements, is deemed part of the provider’s “client revenue” that is included in the “royalty base” for calculating provider payments to ASCAP. Moreover, any party ultimately saddled with responsibility for making performance payments would not only be required to pay 2% of revenue to ASCAP, but would also be required to remit similar amounts to the two other major performing rights organizations in the U.S. (i.e., BMI, SESAC), raising the total performance royalty rate to more than 6% of revenue–a sizeable payment, and in addition to the mechanical reproduction fees due to those same publishers and writers that are members of the performing rights organizations.

Ultimately, ASCAP, in its attempt to receive royalties from AT&T, devotes the majority of its motion to arguing the extensive nature of ASCAP’s control over the ringtone in an effort to distinguish ringtones from full-audio downloads addressed in the Download Decision, as the outcome of this case may very well turn on the question of the party responsible for triggering the performance. In other words, if an ongoing connection is maintained or required whenever the ringtone is played on a consumer’s phone (e.g., similar to the connection required when a sound recording is streamed over the internet), then the second kind of public performance (i.e., the digital transmission performance) may be triggered. On the other hand, if AT&T can successfully argue that the ringtone is downloaded only once to a consumer’s phone (similar to an iTunes track) without simultaneous or near simultaneous playback and continues to reside on the device exclusively, then merely prompting the playback of same by AT&T for an incoming call should fall more squarely within the confines of the Download Decision.

No matter what side you come down on, ASCAP’s PR machine has been slammed in the past for seeking payment from less than profit driven adversaries, including campfire balladeers such as the Girl Scouts. This time around though, eager to combat a slew of negative news reports trashing ASCAP’s pursuit of ringtone monies, ASCAP moved quickly to address the matter with its own membership, dispatching the following clarification to its writers and composers:

“Bottom line, ASCAP is striving to license those that make a business of transmitting its members’ music. This holds true for any medium where businesses have been built by using this music as content or a service – whether terrestrial broadcast, satellite, cable, Internet or wireless carriers providing audio and video content. To be completely clear, ASCAP’s approach has always been to license these businesses – not to charge listeners/end-users.”

Also, noteworthy in ASCAP’s response, is the fact that ASCAP states that it is “in Federal Rate Court with the two largest U.S. wireless carriers,” evidencing that ASCAP will be staging this battle for ringtone royalties on multiple fronts, including with Verizon, AT&T and possibly ringtone providers supplying the mobile carriers.

Needless to say, this will be a long, hard-fought battle and the public performance organizations, still reeling from the Download Decision (which incidentally is still in the appeals process), will not go quietly when the mobile carriers continue to enjoy revenue in the billions from the sale of ringtones. As always, we will continue to closely monitor this case given the potential impact on our clients’ businesses and the need for licensing and distribution contracts that accurately delineate each party’s roles and responsibilities in this constantly evolving digital space.

• Some good news for Yahoo for a change as its stock jumps 7% on a report that Jonathan Miller, former CEO of AOL, is talking with private and sovereign equity funds about funding a buy-out of the company.  More details here.
• Maybe some good news for the economy??  E-commerce sales jumped 15% on Cyber Monday, according to a report by comScore.
• MySpace is rolling out a new service to enable members to look at video clips embedded on their home pages via their mobile phones.  The service will be free to users, with MySpace bundling the video clips with ads.  More information here.
• Goldman Sachs is looking into launching an online bank.  The move appears to be one of the initiatives that GS is undertaking to expand its asset base now that it is a bank holding company.  Here’s the report from the Wall Street Journal detailing the news.

• The New York Times has a piece on Facebook Connect, a new initiative to extend the web’s most popular social networking service to other web sites. 
• The Huffington Post just closed a new round of financing totaling $25 million, bringing the company’s valuation to $100 million.  More info here. 
• Digital music sales will continue to grow, reaching 41 percent of total sales by 2013, according to a report by Jupiter Research.  However, overall growth will continue to drop from annual sales of $10.2 billion to $9.8 billion.
• A new study on web video viewing habits may help marketers refine their ad strategies.  According to TubeMogul, only 16.62% of folks who click on a three-minute video will watch it all the way through.  While this sounds like a nail in the coffin for post-rolls, marketers seeking “true believers” (i.e. those sitting through an entire video) may see the post-roll as a cost-effective approach.
• Microsoft and Blockbuster collaborate to deliver video on demand to mobile devices.  Click here for more info. 

According to the MMA, an Ad Impression is the measure of the delivery of an advertisement from an ad delivery system in response to a user request, whether it is an active or passive act on behalf of the user. The definition specifically includes commentary on key concepts to be considered in defining a valid ad impression, including: (1) an acknowledgement that an ad request is NOT the result of robotic activity, (2) a recommendation that cache-busting techniques should be utilized to prevent undercounting of impressions due to delivery of cached responses to user ad request, (3) a recommendation that measurement of ad impressions should occur as late in the ad delivery process as possible to ensure users have the greatest possible opportunity to view the ad and (4) that advertisements delivered to mobile users without an accompanying request for the ad (such as in the case of pushed content) should not be counted unless there is evidence that a user accesses such ad (which, the MMA points out, should apply to idle screen ads, offline ads and cached ads).  The MMA also calls for more “responsible” reporting on behalf of the measurement organizations to identify any deficiencies/limitations in accurately capturing ad counts.

In defining Streaming Video Advertising, the MMA encourages ad counters to pay attention to the buffering that occurs upon the initial delivery of a video commercial, in order to maintain the concept of counting only when the user has the greatest “opportunity” to view the ad (i.e., a valid streaming video ad impression should only be counted once the video ad begins to appear to the user).  The MMA also encourages the development of functionality for media players to be able to identify the buffering prior to the display of the video ad, and points out the importance of adhering to certain caching principles (as outlined in the definition of Ad Impression), as significant caching functions are often used to facilitate the delivery of streaming videos.  As with display Ad Impressions, the MMA says that the measurement of a Rich Media Ad Impression should occur as late in the process as possible, and encourages movement towards client-side implementation for counting mobile Rich Media ads. 

Lastly, MMA defines Click Measurement in the context of ad impressions that include clickable content, i.e., content that a user may click on to obtain additional content or initiate a transaction, and states that in the event a click transaction may be initiated by user activity that is in proximity to the clickable ad, the specific parameters used for measurement of the associated clicks should be disclosed.  Moreover, the MMA says that regardless of the differing methods used for click counting, these methods should be fully disclosed to users and that development and use of unique click identifiers, as well as establishing processes to filter and exclude invalid clicks from measurement counts, should be encouraged.

The MMA’s efforts call for a more consistent, globally applicable measurement process, which they say is essential for the continued growth of mobile advertising campaigns and future industry standardization.  In effect, the MMA is clearly looking to inspire building a strong currency that can be independently measured and audited.  The recommendations reflected within the new definitions will also bring a level of culpability and transparency to establishing standards for mobile ad currency that the industry has not yet seen, which will inevitably impact how companies structure their agreements with third parties with respect to calculating ad impressions for purposes of minimum advertising commitments, revenue shares based on CPM and CPC, promotional placements, etc.   It will be interesting, and important, to take note of how the movement towards standardization plays out in practice, and if it means our clients can look forward to a sense of predictability and uniformity when striking deals that have mobile ad sales components.