A Southern District of New York federal court yesterday ruled (PDF) that ringtones don't constitute performances and so are exempt from separate royalties. The decision by Judge Denise Cote rejects beliefs by royalty group ASCAP that the carrier is responsible for royalties for any ringtone played in public and grants the complainant Verizon a summary judgment that the only valid royalty is the original for the music file itself.

Judge Cote concludes in the ruling that the only role of a cellular service like Verizon is to transfer the file to the phone and that it can't be held responsible for where and when the ringtone is played. Customers for the ringtones are also exempt as they never profit from playing their ringtones in public.

The finding potentially sets the groundwork for a reversal of $5 million in payments Verizon has made to ASCAP to temporarily resolve their dispute and also sets a legal precedent that may thwart attempts by ASCAP to collect royalties on song samples under similar conditions.

ASCAP has tried to significantly expand its reach in recent months by contending that any digital audio playback in public constitutes a performance. Critics, including representatives for Apple and other music store operators, have accused the association of 'double dipping' by trying to collect royalties twice on every song; they have also challenged that ASCAP is trying to compensate for a perceived shift away from broadcasts and concerts towards personal listening at home and in MP3 players.