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Fosters American Grille was charged $30,450 for playing four copyrighted songs without licenses  (Source:
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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RE: Now?
By Dr of crap on 8/12/2011 12:21:51 PM , Rating: 2
I had no idea that these places had to pay.
SO if a bar has a live band,
they have to pay the band,
pay the RIAA - or however gets the money,
and then raise the cost of the booze and eats to cover these costs and make enough cash to pay it's bills, the workers, and the left over cash to stay open.

And the loosers of this setup - the bar owner and the people sitting in the bar.

Thanks a lot!!

RE: Now?
By Iaiken on 8/12/2011 12:47:37 PM , Rating: 2
And the loosers of this setup - the bar owner and the people sitting in the bar.

Nope, the loser in this setup is you, the consumer.

RE: Now?
By Solandri on 8/12/2011 1:47:27 PM , Rating: 2
The cost of the license depends on how many people the bar can accommodate, and how frequently the music is played. On a per-customer basis it actually isn't that bad (ranges from a few hundred to a few thousand dollars a year for most bars and restaurants). But it is an extra expense whose legitimacy is questionable if all you're doing is piping in a radio broadcast.

IIRC, there's an extra fee if your bar has live performances. With pre-recorded broadcasts, you just need to pay the RIAA. With live performances, you also need to pay the song composers and lyrics writers (they have their own enforcement arm). Actually, the band performing it is supposed to pay it. But if they don't, the venue also gets fined (they're the ones collecting the money from people who come to listen to the public performance). So most venues just pay a universal cover fee in case one of the bands they hire didn't know/didn't care/refused to pay.

"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997

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