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Fosters American Grille was charged $30,450 for playing four copyrighted songs without licenses  (Source: raleigh.uhaps.com)
Restaurant owners must pay licensing fees for copyrighted music played via stereo systems and even live bands

The recording industry can be very aggressive with matters such as music piracy and licensing rights. For instance, the Recording Industry Association of America (RIAA) spent $64 million between 2006 and 2008 to win $1.4 million from pirates, and just this year, the RIAA won $105 million from Limewire, a free peer-to-peer file sharing program. Record labels also flipped out when cloud-based music services were released such as Amazon's Cloud Drive and Google Music.

Now, licensing companies are targeting restaurants. Just like food costs and rent, restaurants must pay thousands of dollars a year to play copyrighted music in their establishments as well. If they don't, a huge bill could find its way to their doorstep, and the rules do not strictly pertain to music played through a stereo; it also applies to bands playing live. If a band covers an unlicensed song, the restaurant could be fined.

Recently, Broadcast Music Incorporated (BMI) sued a Raleigh, North Carolina restaurant called Fosters American Grille to the tune of $30,450 for playing four copyrighted songs without licenses according to WRAL News. A federal judge also ordered that the restaurant pay $10,700 in attorneys' fees. 

"We've been attempting to resolve this for two years now," said Robbin Ahrold, BMI's vice president of corporate communications and marketing. "It is our obligation when we sign an agreement with these songwriters to be diligent and do what we can do to collect their royalties."

BMI collects license fees from businesses that play copyrighted music, and delivers the royalties to artists and copyright owners. Currently, BMI licensing fees are $6,060 per year, and it sends employees into local bars to see what music is playing inside to make sure the establishment is complying with these fees. 

That is how Fosters' owners, John Powers and Ralph Nelson, were caught. Their restaurant had played Michael Jackson and R. Kelly songs as well as a song called "Aeroplane" illegally when the BMI employees made their way into Fosters. The restaurant is now closed, but according to copyright attorney Rick Matthews, Powers said the music lawsuit is not the reason Fosters closed. Apparently there were sewer and water issues in the building, and that was the reason for closing. But a $30,000+ music licensing fee probably didn't help either.

"Oh, it will close a business, you know, having a bill of that magnitude immediately," said Matthews. 

On the other hand, some restaurant owners feel that it is best to pay up to avoid such legal problems in the future. "It's very important to us to have the right music because of the atmosphere, and there are expenses that go along with that," said Royster who owns a Ruckus Pizza restaurant in Raleigh. 

Other North Carolina bars/restaurants that BMI has sued includes Alley Cat, Andrew Blair's, Sharpshooters Sports Bar, Forty Rod Roadhouse and White Owl. According to 
WRAL News, there have been a total of 38 lawsuits across the country this year alone.



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By ptmmac on 8/12/2011 11:26:29 AM , Rating: 0
This has been the case since I started in the restaurant business in 1988(and decades before that too). Any music played requires a license, and it is extra to have live music. BMI and ASCAP both have flawless records winning in these types of suits. This is not at all related to RIAA except that they have the same goal of keeping people from stealing music. The truth hurts but stealing from large corporations is still stealing. You can get around the license by using cable box music because the cable companies have bulk deals with ASCAP & BMI. America is really the one who is most hurt by the tendency to consider Intellectual property theft a non crime. We lose billions of $ a year to internet theft over seas. I do not support the stupid and short sighted tactics of the RIAA. Suing the little guys is as much a waste as locking up pot smokers. Shareware is a reasonable compromise. Also internet radio is good enough to make stealing MP3's redundant. My 2 cents.




By torpor on 8/12/2011 11:56:39 AM , Rating: 5
Stealing means you take something and deprive someone else of it.

But copying/playing music doesn't take anything from anyone. If you have an mp3, and I make a copy, you still have your copy. You've lost nothing. For instance, if you built yourself a computer, and I built a computer with the exact same parts, what have you lost? Nothing, of course. But if I take your computer, you don't have one anymore.

That's why our laws don't equate copyright infringement to stealing. It's not at all the same.

Our country is hurt by stifling scientific and cultural innovation by preserving these "rights" well beyond any reasonable term. Mickey Mouse is still copyrighted, nearly 100 years after first being introduced. Do you get how ridiculous that is?

And FYI, a typical record deal gets you 3% of profit after every expense the RIAA can think of or manufacture is deducted from the sales. So, on the basis of the above lawsuit, the artist might get $900, assuming the full $30,000 is considered profit (good luck).


By MrTeal on 8/12/2011 12:49:00 PM , Rating: 2
I don't fully agree with your analogy. It disregards that the first party is innovating and using that innovation to generate a profit, while the second party is providing the same service without having the expenses. It would be more accurate if I had come up with some novel way of say connecting the parts together that increases performance and that wasn't previously available in the market and then started assembling and selling computers based on that, and you copied the design for your own rig. Nothing is physically being stolen and it's not theft, but you are depriving me of the use of my innovation as I see fit.

Obviously the RIAA's stance that all piracy equates to lost sales is ridiculous, but this isn't really about that. Restaurants and bars provide music as a service to their customers, and it serves to draw people into the establishment. It's reasonable that they should have to pay a licensing fee for that, in the same way that they'd have to pay a licensing fee to have a public display of a UFC fight.


By Solandri on 8/12/2011 1:56:14 PM , Rating: 2
That pre-supposes that every pirated song is a lost sale. That is far from the case. The vast majority of pirated music does not represent lost sales. Those who can afford it usually just pay for it because it's the right thing to do. Those who can't (e.g. kids, poor people) are usually the ones who pirate it.

It sounds like the restaurant in the article was already in financial trouble. So if they had tried to be legit from the start, they probably would have gone bankrupt even sooner and the RIAA wouldn't have gotten paid.


By torpor on 8/12/2011 5:51:07 PM , Rating: 2
Taking the money would be theft.
Taking the music would not.

You assume I am willing to purchase something which moves freely between two people; that being knowledge. People have always tried to control ideas, and they have always failed.

Did you know the song, "Happy Birthday", is copyrighted?

Next time you're at some small child's party, and everyone starts to sing Happy Birthday as the cake comes around the corner, loudly inform everyone there that they're a bunch of thieves. Do it the same way you would if you saw someone raiding the mom's jewelry box and stuffing the contents into their pockets.

If this action feels natural and correct to you, then by all means, continue thinking what you think.

There's one more thing you don't understand. I'm not trying to have a philosophical discussion with you. I'm explaining the legal reasoning why our laws are as they are, and why things like the DMCA are an offense to that original reasoning.


By Flunk on 8/12/2011 12:17:45 PM , Rating: 2
Even taking that all at face value $30,450 seems like an extreme amount of royalities for 4 songs.


By ipay on 8/12/2011 1:20:10 PM , Rating: 2
I don't really mind having restaurants pay royalties for this, although there needs to be some common sense involved. For example, one grocery store was sued because one of their employees was playing a radio in a back room, and after they removed that the lawsuit continued because she began singing to herself.

However, the penalties are way out of proportion. Why is it that this is penalized more heavily than if i had gone into a store, and robbed a bunch of CDs right off the shelf? That seems like a far worse crime to me.


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