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Bar Owners Fighting Relentless Drive for Music Fees:   Playing songs at a bar? Pay up, and don't try arguing!

by JARED SHELLY,  Philadelphia magazine

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?”

BMI has recently sued Philly nightclub Silk City and owner Mark Bee, alleging six instances of willful copyright infringement for songs like The Temptations‘ Papa Was a Rollin’ Stone and Whitney Houston‘s I Wanna Dance With Somebody. The case has been brought in Pennsylvania’s Eastern District Court.

BMI “reached out to the defendants over 130 times, by phone, in-person visits, mail and email” sending cease-and-desist letters and hoping to “educate” Bee about his obligations under the Copyright Act and his obligation to purchase a license to play music in the BMI catalogue, court documents say. The plaintiffs say that Silk City playing music causes them “great and incalculable damage.”

Bee declined to comment on the case, but other bar owners expressed their frustrations with the licensing process overall.

“We really have no recourse. They have the deeper pockets,” said Mark DeNinno, owner of Chris’ Jazz Cafe in Center City. “For mom-and-pop organizations with maybe $1 million in sales, there’s no reason to fight.” For years, he’s paid roughly $5,000 per year in licensing fees. That was after being threatened with a fee of $150,000 per individual offense, he says.

“When I get the bill, it feels unfair,” he said. “It’s not unfair that the artist gets paid, but the amounts are excessive.”

Bob and Barbara’s, a South Philly shot-and-beer bar, got BMI’s attention for playing Duke Ellington‘s Satin Doll about 10 years ago, according to owner Jack Prince. Then the notices started piling up.

“You would think that they’re not that interested in a small establishment but that’s not true at all,” said Prince. “They sue you in federal court and they have big-time lawyers and all that. I can’t even imagine what it would cost to defend yourself in federal court.”

So Prince, like many others, settled, filled out a questionnaire about the bar’s music usage and began paying the three licensing companies the amounts they asked for. He said he pays between $600 to $1,000 per year to each organization.

But Pamela Williams, vice president of licensing and business affairs at BMI, said the organization sees going to court as a “last resort” and said the “vast majority of businesses secure a license and understand their responsibilities.” She also argues that there is plenty of transparency in billing, as licenses are available for anyone to read on its website.

How does a bar owner know that it’s even playing BMI music? Williams argues that with 10.5 million songs, and 50 percent of what’s performed on radio, “it would be almost impossible to have a night of music where you weren’t performing BMI songs. You would have to go out of your way to try to do that because of the breadth of the catalogue.” She also said songs are searchable here.

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.”

Williams says that BMI is not throwing its weight around trying to get money it doesn’t deserve. She also notes that businesses have the ability to change their music usage anytime, as long as they give BMI 30-days notice.

“If they choose not to take a license, they are infringing copyright in violation of federal copyright law,” said Williams. “We’re trying to provide a service to businesses that enables them to secure — in an easy, efficient and transparent way — the ability to publicly perform copyrighted music.”