Music industry targets small restaurant

Besides being a chef, Perry Margolis occasionally strummed his guitar and sang oldies to entertain customers.  That is, until a performing rights company claimed he was breaking federal copyright laws.

“We already paid a licensing fee to BMI,” said Perry Margolis, who with his wife, Terri, runs Harvest Moon Gourmet Bistro, in Miami Springs.  “I thought we were good.”

For more than 10 years, Margolis’ has paid Broadcast Music Inc. a licensing “fee” of nearly $400 a year so he could “legally” sing and play the radio for customers.  He has proudly displayed an official multi-colored BMI sticker on his front window that signals compliance.

But the BMI fee didn’t cover songs licensed by another performing rights behemoth, the American Society of Composers, Authors and Publishers, or ASCAP.  Together, BMI and ASCAP license nearly all of the music played in the US.  

ASCAP sent Margolis notices and a separate license agreement, last month, seeking a $683 annual fee.  And in case Margolis wanted a copy of the 10,000 page repertoire of ASCAP licensed works, he could send in check for $2,200 and receive by mail a 50-pound list.

“One of the notices says we could face legal action,” said Terri Margolis, who added that she has stopped playing all music at the eatery.
Playing the radio for customers at a restaurant like Harvest Moon is considered a public performance, rights companies assert – and that requires a license.  The companies frequently dispatch music “researchers” to bars, restaurants and nightclubs throughout the country who are trained at spotting violations.    

Failing or refusing to comply with licensing rules can result in stiff penalties which can run between $750 and $30,000 -- on each song -- for copyright infringement.  Last August, a North Carolina restaurant was ordered to pay BMI $30,450 for “illegally” playing four unlicensed songs.

“Our goal is to educate, not litigate,” said Ari Surdoval, director of corporate communications for BMI, in Nashville, which protects the copyrights of some 500,000 music publishers.

“We understand that a restaurant owner’s main area of expertise may not be copyright law.”

Surdoval added that BMI agents want to help restaurant owners, and others, get licensed “at the lowest possible rate.”

BMI and other performing rights companies use many factors to determine whether someone has to pay a fee, and how much, depending on:  the size of the organization, whether you play pre-recorded music, the radio or TV, how many speakers you have and whether you play live music.  If you play live music, it depends on whether it is original or “cover” – music owned by somebody other than the person playing.

For example, when Margolis chipped in to entertain residents at a local charity event, a while back, he sang some oldies, including “I’ll Follow the Sun,” by the Beatles.  These cover songs have a special license fee schedule.

The venue would be responsible to obtain a music license, according to Surdoval, and most cities, large organizations and non-profits purchase “blanket licenses” to avoid copyright infringement snafus.  

If you don't own or control the music you play, you likely need a license to use it, according to BMI.  This includes music piped through DJs, jukeboxes, karaoke machines and even streamed music via the Web -- including YouTube.

Locally, when ASCAP or BMI licensed songs are played in venues like the Fourth of July parade, car shows, theater performances, fitness classes and even the annual River Cities festival, organizers should contact the companies to secure the appropriate licenses.

“We have always tried to do things the legal way here,” said Perry Margolis, who puts in 12-hour days at his 400-square foot restaurant that includes no inside seating.

“A song is property,” said Vincent Candilora, Senior Vice President for Licensing at ASCAP.  “If you don’t own it, you need to get permission to use it -- because someone needs to get paid for its use.”

Candilora said that the value music adds to a business can be measured by counting how many customers tap their feet.

In 1999, Congress passed the Fairness in Music Licensing Act which exempts some uses of music from copyright fees.  For example, a restaurant
that has less than 3,750 square feet and plays the radio -- but does not charge guests admission to hear the music -- could be exempt.  However, if it uses another means to transmit music – like a live band or performer – that could trigger a licensing fee clause to one of the big three performing rights groups.

So far, Margolis said, he has not been contacted by the third group: the Society of European Stage Authors & Composers, or SESAC.

“We are a very small business and can’t afford to pay so many fees to play the radio,” said Terry Margolis, who feels that Harvest Moon has been eclipsed by music industry rules that squeeze the “little guy.”

“I guess we’ll just have to entertain customers with our smiles.”