Restaurant Law Blog

Monday, June 24, 2013

Music Distribution Licenses – Worthless or Worth It?

A case filed in federal court this week brings up some important issues for bar and restaurant owners to consider. Are you legally permitted to play music at your establishment? If you do so without prior approval or licensure (from the Artists themselves), you may face large penalties.  Even if you legally purchase music from iTunes, you are still prohibited from playing your downloaded music without obtaining the appropriate music distribution license; this is because your use of the music is for a “commercial purpose” rather than personal enjoyment. This is also true if you have a cover band play at your establishment. 

“Commercial purpose” or “commercial use” is defined as any use of a copyrighted song that somehow helps a person earn money. It is assumed that restaurant and bar owners play music at their places of business to draw in crowds, and thus, to earn money.  

A recent lawsuit was brought in federal court by documentary filmmaker, Jennifer Nelson, against Warner/Chappel because she does not believe there should be licensing fees for the song “Happy Birthday.” Warner/Chappel is the publishing arm of the Warner Music Group and it claims to own the licensing rights to “Happy Birthday,” which nets the company an estimated $2 million every year in licensing fees from people who want to play the well-known and much-loved song for “commercial purposes.” The suit seeks class-action status, asking that the licensing group return all of the fees it has collected from “Happy Birthday” since 2009. The idea of paying for “Happy Birthday” may seem ridiculous, but right now it is the law.

As a restaurant, bar, or nightclub owner that plays music, you have three options: (1) make a deal with the artist and pay him/her directly; (2) pay a licensing fee to the Performing Rights Organization (ASCAP; SESAC; or BMI) that represents the artist; or (3) do nothing and hope you do not get caught.

Why should you pay to play music in your establishment if it seems like no one else is? Because the fines can be hefty. Violators can be forced to pay fines ranging from $750 up to $150,000 per song. If that is not convincing enough, then you must also know that one of the largest Performing Rights Organizations – BMI (Broadcast Music Incorporated) – has never lost a single lawsuit filed against copyright infringers in 51 years. 

Furthermore, the internet has made it extremely easy for Performing Rights Organizations to identify which venues are playing music; often places have websites that advertise nights for live music, karaoke, etc. Obtaining a license from a Performing Rights Organization does not have to be costly. For large operators with multiple locations, the fee could be as much as $9,000 per year, but for smaller venues, a license may be as little as $300 per year.

For questions or concerns regarding music distribution licenses, please contact DiPasquale Law Group for a free consultation.

 


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