Legalized extortion? DTM music venue owners sound off on licensing fees

May 23, 2014

"When I first opened I didn't have any idea about ASCAP - even moving from Nashville and seeing the big beautiful building with ASCAP proudly displayed atop it, I didn't know what it was," says Fellini's owner Jacie Dunkle.

Ask most people, even those who like to listen to live music on the DTM, what ASCAP, BMI, and SESACO are, and you'll most likely get a blank stare. Ask a DTM music venue owner, however, and you'll get an earful. And don't be surprised if there's some gnashing of teeth and clenching of fists. Of all the potential hassles of hosting live music on the DTM, you'd think that battling multi-million dollar music organizations wouldn't be one of them. But it is.

About a year after Fellini's owner Jacie Dunkle began hosting live music she got a visit from a representative of the American Society of Composers, Authors, and Publishers (ASCAP), who told her, in so many words, that if she didn't pay the organization a yearly licensing fee for the right to have live music she could be sued.

ASCAP is a non-profit performing rights organization which licenses and collects royalties for performance of its member's original music. It's one of three major licensing groups, the other two being Broadcast Music Incorporated (BMI) and Society of European Stage Authors and Composers (SESAC), and all of them go after small businesses across the country like Dunkle's to collect licensing fees that are based on the size the establishment, which can run anywhere from $300 a year to $4,500 a year. In 2011, ASCAP, the larger of the three, had over $900 million in revenue.

Basically, any business that has live music, plays CDs, plays the radio, uses a DJs, charges a cover, or allows people to dance, is likely to be approached aggressively by all of these groups at some point. The idea is that any music written by their members (which basically includes every famous act or musician you've ever heard of), whether it's played live or on a sound system, is a violation of copyright law. To be able to play that music, and avoid legal action, business are told they must pay a yearly licensing fee.

Technically, U.S. Copyright Law requires that permission must be obtained from the copyright owners of songs performed in public, in advance of the songs being performed. Obviously, for the countless unknown bands and musicians across the country, that's next to impossible to enforce. And clearly, for most small bands, getting, say, Bob Dylan's permission to play a cover of one of his songs isn't remotely practical or even possible. So, organizations like ASCAP have chosen to go after the venue owners who host live music. Here's how ASCAP puts it:

"As a convenience to business owners who use their music in public performance, the members of ASCAP….have collectively agreed to issue a general license to businesses who use their music in public performance. This license provides permission for public performance of the ASCAP repertoire. Fees collected for the license are distributed to the members. ASCAP members have determined both the rate schedule and the distribution of the license fees collected."

The way many venue owners see it, this is a form of legalized extortion. What's more, their tactics are aggressive. According to Dunkle and other venue owners, they employ "spies" to find out if any copyright protected music is being played at the restaurant. Indeed, one venue owner the DTM spoke to, who refused to pay the SESAC fee for a time, was eventually informed by the organization that they knew that 130 copyright protected songs had been performed at the venue, and that if they didn't pay the licensing fee, they could face legal action.

"Occasionally I will get a call or a visit from some young people asking if they could hold a DJ party here and if they could dance," says Dunkle. " I can now tell who they are immediately and I always answer no. I will get a phone call from someone asking what band is playing and then they ask what kind of music do I play when the band is on break. I know immediately why they are asking."

According to another venue owner, the organizations use the same tactics as debt collectors. (Note: several DTM venue owners/managers agreed to provide comments, provided we didn't name them.)

"There was a time when we would get 5 calls a day from these people," the venue owner said.

"As far as I am concerned, ASCAP and BMI are near to only being legalized extortionist," says yet another DTM venue owner. "I hate those guys."

Of course, ASCAP doesn't see it that way. When Dunkle questioned the license rate, and an additional request that she pay ASCAP a percentage of any cover charge, she got this response:

"Securing an ASCAP license is analogous to paying for the ingredients you buy to use in the food you serve, or paying for the beverages you serve to your customers. As the business owner, you license the music to be performed, and hire a band to perform it, just like you secure a liquor license and then hire a bartender to serve the beverages.

U.S. Copyright Law clearly states that music is an enhancement to a business when played in public performance. As previously stated, the ASCAP Rate Schedule is determined by the members."

Some venue owners refuse to cooperate with these organizations.The DTM spoke to one such venue owner, who said they think the licensing requirement is bogus, and that they are bluffing about suing small venues, so they don't pay. And nothing has happened to them so far.

"I don't know, from what I hear they are stepping up their game," said the venue owner, " and it's not about whether or not they can win in court, it's about simply threatening to take small venues to court if they don't pay, which most can not a afford."

"Most of the time, restaurants and clubs just go ahead and pay the fees," says Dunkle, who believes the lawsuit threats are real. "No one can win in a lawsuit. ASCAP has shown me many lawsuits they have filed and won. Lawyer Ben Dick took them on for Chief Gordon during the old Fellini's days and when their lawyer came to town to meet with Ben and Chief, it was clear to Ben that no way was he going to win, so they settled."

Indeed, back in March, according to an article in the Hartford Business Journal, a restaurant owner in Hartford, Connecticut forked over $18,000 to BMI, after "agents" of the company informed the owners that they had been present when copyright protected tunes had been played on the restaurant's sound system. Rather that risk going to court, the restaurant settled.

"A lot of companies can't be successful with these, in my opinion, frivolous lawsuits," a lawyer told the Journal. "This is about big companies who have gobbled up the right to these forms of entertainment and now are going after the little guy."

Of course, companies like BMI argue that they are simply sticking up for songwriter's rights to compensation. But, of course, a hell of a lot more goes to famous stars who no longer need the dough, while many smaller artists and acts get a measly check in the mail.

And they're upfront about their tactics, though couched in language like this:

"BMI makes every effort to educate business owners as to the value of a license and the significant costs associated with copyright infringement," a BMI spokeswoman told the Journal. "Legal action is a last resort after all other efforts have been exhausted." BMI reaches out to businesses, sometimes "dozens of times," before a lawsuit is initiated, the spokeswoman said.

"Frankly, I hated the whole thing," says yet another venue manager the DTM spoke to. "BMI was costing me roughly $4,000 a year, ASCAP was approximately $1,200 a year, and SESAC was approximately$1,000, but i had no choice, so i paid up."

The manager thinks there's an argument to be made that the fees are justified, in that artists are getting paid for their original works, but he says there's also an argument to be made that going after small venues across the country is legal extortion.

Of course, the whole situation raises the complicated issue of modern copyright law. Is it fair that Disney can plunder the world's literature and then aggressively sue anyone who copies or mimics its various productions? ASCAP is famous for going after the Girl Scouts of America in an argument about what songs they could sing around the campfire. They also went after Verizon, arguing that song ringtones amounted to a public performance of the song. Oh, and technically, you can't sing "Happy Birthday" without approval from ASCAP. Today, copyright law basically gives the owner of a song a broad monopoly of use on its performance for a long time -- the life of the artist, plus 70 years. Is that a good idea?

Just recently, lawyers representing a long-forgotten rock band called Spirit have filed a lawsuit against Led Zeppelin, claiming that the band members ripped off Spirit's song "Taurus" to create the iconic hit "Stairway to Heaven." Indeed, you can listen to "Taurus" on YouTube, and parts of the intro are immediately recognizable. But, of course, Zeppelin took it (if they did indeed take it) and did something completely different with it. Of course, it's great that lesser known, or should we say underrepresented artists, like many of the African-American blues masters that rock and rollers stole from, should be compensated, but should every influence on a created work be compensated, once that creative work starts raking in the dough?

Copyright, of course, was enshrined by Thomas Jefferson in the Constitution, which gives Congress the authority to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Basically, this was a balancing act between creators and society, for someone else might come along and make the original idea better, and that should freely be allowed to happen for the betterment of society and culture. Indeed, a limited copyright would allow the creator to be rewarded, but would also allow ideas to flow freely. Today, of course, major corporations and artists guard the rights to their work like small nation-states.

But originality and appropriation are one in the same. Nothing is born in a vacuum. Musicians especially, are influenced by what came before, indeed inspired to copy and mimic and transform past works into something "new." Indeed, rock and roll itself is an appropriation of the blues, and blues and jazz as art forms built on a foundation of appropriation and imitation. To copyright the use of or playing of music beyond an initial use, and with perhaps a short period of time for second use and commercial rights, does nothing but strangles the heart and soul of the art. Indeed, it punishes the public and the culture that made the music iconic in the first place.

Note: The last two paragraphs, by the way, were basically ripped off from writer Jonathan Lehman's essay in Harper's Magazine called the "Ecstasy of Influence, " in which he ripped off a few things from this reporter.

"Many have made the argument that music played at a commercial venue benefits the artists as much as the venue," says one last DTM venue owner. " I agree with this, especially a venue like ours where most of the music played is independent artists. We get the sound out there and people are constantly asking us who we are playing so they can go out and purchase the music. As for live music, I will just never understand why the venue has to pay for a band who wants to come in and do a cover tune."

This venue owner believes these organizations are a legal scam and the industry needs to grow up and figure out a better system, but because only the biggest and richest companies are profiting by this system it will never change.

Young artists, the venue owner says, need to look into signing with organizations like Creative Commons and the few others out there like them.

"Instead I am sure they are told early in their careers that they will benefit by putting their music with ASCAP and the like, they sign and gigantic record labels now have one more reason to extort money from mom and pop bars and restaurants all over the country."

Oh, and if you read this story out loud in a local bar, you can expect a call from my lawyer.