ASCAP and BMI employ investigators to roam the country identifying new restaurants, bars, clubs or other establishments where music is used but the establishment does not have a license. Venue owners are required to purchase a license, typically for a single annual fee based on the size, seating capacity and type of venue. A typical case begins with the company’s attorneys sending a letter “inviting” the establishment to purchase a license, sometimes pay some settlement fee for past damages. Most clients who receive one of these letters believe it is extortion by big companies. Although I know that small eateries and bars struggle to make a living, this situation is akin to someone using the restaurant’s secret recipe or even enjoying the food without paying for it. Musicians and artists struggle to make a living from their talents and these companies help them earn a living in the complex world where there are so many users enjoying the music but no practical way to collect fees from these users.
If the “invitation” (read “demand”) is not accepted, the matter generally proceeds to an enforcement action in federal court. BMI files between 75 and 125 copyright infringement lawsuits against eating and drinking establishments every year, and ASCAP files between 250 and 300 cases per year. Since most accused infringers settle, it is easy to see that the chance of getting caught is fairly substantial. If is not “if,” rather “when.” How much would a court award anyway? More than most establishment owners believe. TechDirt reports that a North Carolina establishment was ordered to pay $30,450 for unauthorized performance of just four songs, together with $10,700 in legal fees. A January 2013 case was brought against East Ellijay Pourhouse Bar and Grille, LLC for unauthorized public performance of nine songs in Ellijay, Georgia (population 1,619). As you can see, small town places are on the radar of these investigators. Under the Copyright Act, these organizations can recover statutory damages ranging from $750 to $30,000 per infringed work (song), and that maximum may be increased to $150,000 if the infringement was willful.
How do you obtain a license agreement to avoid these risks? ASCAP and BMI have applications, fees and instructions available on their websites. Fees are calculated based on size and type of establishment. Realistically, most establishments need a license from each organization. It is hard to limit the music to the portfolio of one or the other. ASCAP explains:
A local bar or restaurant uses music to enhance the atmosphere and draw in customers. No one wants to sit in silence. And live music pulls in a nice crowd that spends money at the bar.
The owners never question the need for a liquor license. But it’s a different story when it comes to the license required to play music under copyright.
The owners dispute the need to pay. They say music is not generating revenue for them. They try to push off responsibility to the band. They claim they can’t afford a license that might amount to a few hundred dollars a year. They say they’ll just stop playing music altogether.
Like the quality of the décor, food, beverages and service, music contributes to the success and profitability of a business. The people who created that music have a right to share in the profit. And ASCAP exists to make this possible.
Many restaurant and bar owners are simply unaware of the many licenses needed to operate their business. While it is easy to contact the local government entities to obtain a list of business permits that may be required, licenses from private entities are harder to learn about. Working with an experienced law firm can help prevent an expensive enforcement action from landing in your mailbox.