By Jared Shelly, BizPhilly
Although it may surprise people outside the service industry, bars and restaurants must pay music licensing fees for the right to play music in their establishments. That’s live music, dinner music, DJs, jukeboxes. Everything. If you’re going to play Shake it Off at your bar, Taylor Swift (or whoever owns the publishing rights) wants a check.
While the process is legal, it has bar and restaurant owners upset — and a growing list of proprietors claim the “take-it-or-leave-it” fee structure lacks alternatives and transparency in how they’re billed. There are three main music licensing companies: Broadcast Music Inc., the American Society of Composers, Authors and Publishers and SESAC Inc.) To some, the way they operate feels like a shakedown — especially since the companies send spies to the establishment to write down what songs they hear. Then comes a questionnaire asking about the establishment’s square footage, live-music schedule, jukebox situation and other things — outputting an amount they have to pay. But don’t try to argue. If you don’t comply, they’ll just use their big money to take you to court. Just ask Silk City in Northern Liberties. More on that in a minute.
But bar owners are fighting back. The Pennsylvania Licensed Beverage & Tavern Association, The Food & Beverage Association of San Diego and Michigan Licensed Beverage Association — have teamed up to create the Fair Music Licensing Coalition, which hopes to change the way the copyright law is implemented.
“We have several issues with the way they charge businesses because it’s not accurate,” said Amy Christie, executive director of the Pennsylvania Licensed Beverage & Tavern Association. “The reason [BMI] never lost a case is because they’re able to operate so broadly under the federal copyright law.”
For example, Christie says there’s not enough transparency in billing. “They can increase rates on whatever they want with no cap,” said Christie. “Say you sign a contract and pay $500 per year, the next year they can very well charge you $1,000.”
Plus the licensing companies don’t take original music into account, she says. A licensing company just asks how many nights per month you have live music and music playing over the speakers — but there’s no way to account for music played by local, original artists — or artists that aren’t part of the licensing company’s repertoire. It’s the reason that many bars have electronic, online jukeboxes which factor licensing fees into their costs. (You know, the ones that are inherently lame and play mostly mainstream music.) It’s also the reason that some bars have decided to stop live music altogether. That’s what happened at Philly’s Jose Pistola’s, which cancelled its Wednesday live music events after a dispute with BMI.
“Say I hire a local band and they perform all their own songs. They are not collecting royalties,” said Christie. “We are paying that band to play — but we’re also charged by a performing-rights organization that isn’t paying this band a dime just in order to have music? Why pay the performing-rights organization for a song they neither wrote, composed or performed?”
Christie and the Fair Music Licensing Coalition argue that an adjustment needs to be made regarding how establishments are billed regarding square footage — saying that it should just encompass the areas used to serve patrons, not the entire space. Williams says that, where possible, BMI uses the total occupancy square footage. If that’s not available, they use the total square footage.
Christie’s big gripe is that there’s no recourse for bar owners faced with the tough choice of paying what the licensing companies demand or going to court. “You can argue with them, but they just get more and more aggressive and threaten lawsuits. It’s financially unfeasible for a small business to take on a billion-dollar industry operating with free reign due to the copyright law.”
Find the link to the whole article at www.pataverns.com, www.phillymag.com, or go to http://www.phillymag.com/business/2015/11/11/silk-city-bmi/.