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The Baltimore Business Journal
Volume 22, Number 18
September 17th, 2004

Money – that’s what they want

Music rights companies crack down on small businesses who don’t pay to play

There are no live bands entertaining Harbor View Health Club customers as they squat, life and stretch. But every year, the club pays about $600 in fees for music-performance rights.

That’s because Harbor View pipes back-ground music into the first floor of its facility. Playing music in a place of business is considered a public performance – even if the music is prerecorded.

Music copyright law affects businesses from bars and restaurants to fitness centers and salons. For some, such as live music clubs or dance studios, music is integral to the business. For others, such as retail stores or doctors’ offices, it helps provide ambiance.

"Almost every member wants some kind of music, "Harbor View Health Club Manager Melissa Stallings said. "Music helps motivate people when they’re working out."

But no matter what businesses use music for, they must get permission to do so. While many business owners comply, some don’t know that they need permission to play music. Others simply refuse to pay for licenses, which can have expensive consequences.

A federal judge recently ordered Baltimore hard-rock club Thunderdome to pay a $27,000 fine for the performance of copyrighted music. And last week Baltimore jukebox company Cadillac Amusements was sued for allegedly playing copyrighted music without a license.

Three organizations control music-performance rights: the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music Inc. (BMI); and SESAC Inc. A license from an organization allows performance of any music to which it controls rights. The songwriters an organization represents receive a percentage of licensing fees.

License costs vary depending on how a business uses music. A 300-seat club with live music most nights could pay $1,000 a year for a single license; a small country club could pay less than $150. Businesses often buy licenses from all three organizations, since each controls rights to a different library of songs. For companies that subscribe to outside music services such as Muzak, licensing fees are included in the bill.

Among business owners, music licensing can be a controversial topic. Some feel if they spend their hard-earned money on a CD, they should be able to do whatever they want with it, including playing it for their customers. And some think it’s unfair to take money from everyday business-people and give it to music-industry figures.

Buying wine gives you the right to serve it at home, but businesses that want to serve wine must have a liquor license, says Vincent Candilora, ASCAP senior vice president of licensing. With music, he says, "It is the same thing; you are serving up what is not your property." The organizations say they try repeatedly to inform owners of license requirements before taking a dispute to court.

The Maryland Restaurant Association gets several calls a month from members contacted by one of the organizations. Often, the owners have never head of ASCAP (www.ascap.org), SEASAC (www.sesac.com) or BMI (www.bmi.org), and want to know if they are legitimate, said Melvin Thompson, who handles government relations for the association. Many associations, including the Maryland Restaurant Association, work with one or more organizations to offer member discounts on licenses.

"If you want to keep guests longer, if you want to keep guests more comfortable, you play music," said David Sadeghi, chief operating officer of Big Steaks Management Inc., which runs nine area restaurants that include Ruth’s Chris and Eurasian Harbor. Just as the music played at Big Steaks’ restaurants varies with the atmosphere, the licensing fees each establishment pays vary, he said. Sadeghi couldn’t give a total for how much Big Steaks spends on licensing, but said licenses held by different restaurants often range from $1,200 to $4,000 a year.

Despite all those fees, the average songwriter makes $5,000 a year or less in royalties, according to BMI. Most are not famous musicians, though famous musicians may perform their compositions.

Said ASCAP’s Candilora: "The songwriter is really the smallest of businesspeople."

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