Avoiding the Blues

Walk in almost any restaurant, bar, or foodservice venue and you will likely hear music. It could be music from a jukebox, a music service like Muzak, or live entertainment. However, no matter what the source of the music, the business operator must navigate and comply with various music licensing laws. Restaurants and other venues that fail to comply with these laws risk legal action and fines.
Going way back in history, music publishers made most of their income from the sale of sheet music. Over time, the urbanization of the United States resulted in entertainment moving out of the home and into public venues like nightclubs. This in turn meant music performance was dominated by professional musicians and performers, which in turn resulted in a diminution of sheet music sales over time. Music venues were making huge profits on performances, and their only music cost was the cost of the sheet music.
This changed with the United States copyright law of 1909. This law gave artists certain rights regarding how their work was used, much like patents protected inventors. The 1909 law applied to public performances of music, which gave birth to the need for “public performance rights,” which cover the right to play music that the general public will hear. This gave rise to organizations that took over the organization and handling of licensing of these public performance rights. There are three primary groups that do this. One of these is ASCAP, which is the American Society of Composers, Authors and Publishers. Another one is BMI, or Broadcast Music, Inc., and both have millions of songs in their catalog. A third group that is smaller but still a player in this arena is Nashville-based SESAC, the Society of European Stage Authors and Composers.
Fortunately for restaurant operators, there are ways to make compliance easy.
A great source of information is your state restaurant association. I always recommend that state restaurant owners and their suppliers support their industry by joining the Kentucky Restaurant Association (www.kyra.org). In some cases, membership in the KRA will enable them to obtain a discount on music licensing services.
A restaurant or other venue operators should also take an inventory of what kind of music they play and how often and when. For example, do they do something special on St. Patrick’s Day, Fat Tuesday or for Cinco de Mayo? The kind of music could include tapes, compact discs, live performances, DVDs, music on hold, jukeboxes, radio, television, karoke and DJs. Once they know their “inventory,” they can contact the music licensing societies to make sure all bases are covered.
Some operators keep it simple by entering into a license agreement with a background music provider such as Muzak. These providers enter into agreements with the aforementioned performing rights societies. The restaurant pays a fee to the background music provider, who has a business relationship with the organizations such as BMI, ASCAP and SESAC. An example of a Muzak provider is the Lexington office of South Central Sound (www.southcentralsound.com).
Another approach is to install a coin-operated jukebox. However, if the operator does this they cannot charge an admission fee. Additionally, the jukebox should be licensed by a licensed operator.
In January of 1999, a new copyright law went into effect which exempted some restaurants from paying royalties on television and radio music only. For example, if a restaurant is under 3,750 square feet, they will be exempt, and if they are over that size they still may be exempt under certain conditions.
A compliance danger area for a venue is when a local band plays its own songs but then on occasion plays a “cover from an entertainer protected by licensing. Another emerging compliance danger area is the use of songs downloaded via an IPod or similar device

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