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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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The legal concept
By deathwombat on 8/12/2011 12:38:47 PM , Rating: 2
The legal concept is that playing music in a restaurant represents a performance, and the diners represent an audience. Of course, most people don't go to a restaurant to listen to the background music. You might go specifically to see a live band, but I don't choose a restaurant based on what radio station they play in the background. You often can't hear the music anyway; the music is a form of white noise to drown out the conversations of the other diners.

The courts are supposed to award damages to remedy injury. Anti-piracy laws allow and require them to issue awards that far exceed the damages suffered by the copyright holder in order to serve as a deterrent, but there is still a basic principle that you don't have a case unless you've suffered an injury. People don't go to restaurants to listen to background music, they go to eat food. The music that plays in the background does not deprive the copyright holder of any revenues (if anything, it promotes their music and increases revenues), so without any damages, how can any court award remediation?

RE: The legal concept
By deathwombat on 8/12/2011 12:47:29 PM , Rating: 3
Also, the deterrent portion of the award should be kept by the state. Awarding the copyright holder $25,000 for each $0.99 song stolen allows content creators to earn more money from lawsuits than they from sales, which in turn provides an incentive for them to promote piracy, thus defeating the purpose of the deterrent award.

If the government wants to fine people $25,000 per infraction to deter piracy, that's their prerogative. The copyright holder's award should be equal to their damages (plus their court costs if they sue for them), and the $24,999 deterrent should be kept by the state. The recording industry shouldn't be allowed to profit off of the state's deterrent efforts.

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