Yahoo Will Pay Musicians It Plays

Yahoo Inc. signed a deal Wednesday to compensate musicians for songs it streams via Internet broadcasts--an arrangement that does not apply to traditional radio.

Terms of the deal were not disclosed and it was not clear how much musicians would receive each time their work is played. The company said listeners would not notice any difference in broadcasts.

In signing a contract with the Recording Industry Assn. of America, Yahoo, which provides online access to more than 525 national, cable, local and Internet-only radio stations, complied with the Digital Millennium Copyright Act of 1998.

The act requires Internet broadcasters to get licenses from record labels or the RIAA, the trade association of the record industry, to broadcast songs.

Although radio stations pay royalties to composers and lyricists, performers are not compensated for the broadcast of their work on traditional radio. The 1998 law required changes in how that formula applies to the Internet.

The RIAA praised the deal as an example of the online and music industries working together in the digital world.

Yahoo said it signed the deal to avoid a lengthy arbitration process that other Web broadcasters are engaged in to comply with the act. Matt Rightmire, a vice president at Yahoo, said negotiating directly with the RIAA was the best way to ensure a good deal for the Internet giant.

One area that remains uncertain for online music is the issue of downloading songs. The most popular method to download music, or store it on a computer, is through compressed MP3 files, which have taken hits in court for copyright infringement.

In addition, Yahoo’s Chief Executive Timothy Koogle said the company will likely report record third-quarter revenue as the size of its new contracts with advertisers and the value of those agreements rose from the second quarter.

Koogle made the comment when asked to comment on concerns that advertising revenue may be declining at the No. 2 U.S. provider of content over the Internet. Such concerns have helped push Yahoo shares down about 20% in the past eight trading sessions.

Koogle said he expects Yahoo to meet analyst forecasts that it will report between $275 million and $282 million in third-quarter revenue.

Yahoo shares fell $5.06 to close at $112.06 Wednesday in Nasdaq Stock Market trading.