The Wild West of the Web has gotten a little tamer.

A federal judge late yesterday resolved a long-running battle between three big online music-streaming services and independent composers and musicians over how—and how much—artists should be paid for songs people listen to over the internet.

In a landmark ruling that sets a precedent for online streaming music royalties, U.S. District Judge William Conner in White Plains, New York, ordered Yahoo, Time Warner's AOL, and RealNetworks to pay as much as $100 million in total to the American Society of Composers, Authors, and Publishers, the leading performance-rights organization representing songwriters.

The 153-page ruling sets a basic rate of 2.5 percent of music-generated revenues to be collected from the websites for the use of Ascap-licensed songs between 2002 and 2009.

Ascap hailed the ruling, saying that the three companies could be on the hook for $100 million in retroactive royalties, based on the formula selected by the judge.

"We believe this is a historic decision, because for the first time it provides a clear framework for how online performances of copyrighted musical works should be fairly valued," Ascap chief executive John LoFrumento told Portfolio.com in an interview.

The decision is the culmination of a three-year battle between Ascap and the websites, waged in so-called rate court, over the appropriate formula for determining online streaming music royalties owed to Ascap and its members. The ruling does not apply to the major record labels, which have struck their own revenue-sharing deals with many music websites.

"In the early days, we gave a lot of leeway to the online services because we wanted their businesses to develop," LoFrumento said. "But now that these businesses have matured, the time has come for us to establish fair rates, and when we tried to do that in negotiation, we were pushed into a rate court because we couldn't come up with an agreement."

Yahoo must pay performance royalties dating back to 2002, while AOL's and RealNetworks' unpaid royalty bills go back to 2005 and 2004, respectively. The new formula will be used to determine royalty payments through the end of 2009, at which point the parties must return to the negotiating table.

AOL would owe nearly $6 million for 2006 alone, for example, while Yahoo would owe $6.7 million, based on the court-mandated formula. Future royalties, based on Judge Conner's precedent, could amount to hundreds of millions of dollars more.

Conner ruled in favor of Ascap's "simple formula," which applies a flat percentage to streaming music revenue. The websites had advocated for a more complex formula that would have broken down revenue into five categories based on the nature of the stream.

"The court finds no fundamental flaw with the formula proposed by Ascap for computing the fee," Conner wrote in his decision. He ordered both sides "to cooperate in computing the royalties due to Ascap." LoFrumento said that discussions with the websites are set to begin immediately.

Samantha Murphy, an independent musician who has been outspoken about copyright issues, reacted warily to the ruling.

"I have no reason to believe this will change things for the 'long-tail' artist since Ascap cannot seem to figure out a fair method of distributing the funds they collect," Murphy said, referring to smaller, independent artists who she claims are often left out of music-royalty distribution schemes. "I am quite certain that if you asked Ascap right now how they are planning to distribute these funds from AOL, Yahoo [and RealNetworks], they would not be able to give you an answer."

LoFrumento said that Ascap would be looking to the websites to provide it with the details of the streaming performances, in order to determine how to distribute the royalty payments to its members. He also said that Ascap would be using the new formula in negotiations with other music streaming websites.

Bob Kimball, general counsel for RealNetworks, sought to play down Wednesday's ruling.

"To be clear, the court did not award $100 million in royalties," Kimball said in a statement. "The court has provided a formula and required the parties to negotiate how the rate will be applied to their different businesses. Those negotiations have not yet commenced, and there is considerable work to be done before a final resolution is reached."

"This is a long way from being over," Kimball added.

Jonathan Potter, executive director of the Digital Media Association, a trade group representing the websites, said that his group "agrees that internet portals and multifaceted online services should pay fair royalties to songwriters and music publishers."

"We are disappointed, however, that the court ruled that online services' royalties should be based in part on service-wide revenue, not simply on revenue directly attributable to music usage," Potter said. He said it could take several weeks to work out exactly how much Yahoo, AOL, and RealNetworks will have to pay.

A Yahoo spokeswoman declined to comment on the ruling, and a representative of AOL was not available for comment.