Music licensing investigation hits a sour note with retailerscontinued from page 1 That’s because BMI, one of three major U.S. companies
that license public performance of music, is in the midst of what it calls
an intensive campaign to inform as many as one million retailers and other
businesses that they may be violating copyright laws by playing music
for their customers.
BMI describes its campaign as an educational process.
But several retailers who have been contacted by BMI told the Michigan
Retailer that the company’s approach can be misleading and seems
calculated to scare retailers into paying for a license. “It looks like their tactic is to catch you off guard,”
said Faye Hirt, owner of Faye’s at Mira, a women’s clothing
store in Holland that was called by BMI. According to Hirt, the BMI representative
asked the employee who answered the phone if the store played music. Shortly
afterward, Hirt received a licensing contract - with her business name
and address filled in - indicating that she owed BMI more than $300 per
year for permission to play music. After calling MRA to find out whether music licensing
laws applied to her business, Hirt informed BMI that she was exempt because
her store played only radio music and fell within guidelines on the maximum
number of speakers allowed. She later got into what she described as a
testy conversation with a follow-up caller from BMI. “They didn’t seem to be looking out for our
best interests,” she said. Another MRA member, the owner of a furniture store in
southwest Michigan who preferred not to be identified, said the employee
who answered her store’s call from BMI thought it was a radio station
doing a survey. She also received a filled-out contract for a license
that would have cost her business $1,957.50 per year. However, she said
a license wasn’t necessary because she plays music only in the office,
not on the sales floor. Stepped-up enforcement The other two music licensing companies, ASCAP and SESAC,
may also contact retailers to monitor compliance with licensing requirements.
ASCAP relies on its area licensing managers, who visit
businesses to observe music use. It also receives tips from consumers
and business competitors, according to Bonnie King, ASCAP vice president,
general licensing. New technologies and changing music usage have prompted
licensing companies to step up enforcement in less traditional music-using
venues, such as retail stores. Because musical works are copyrighted, permission is required
for public performance, which includes broadcast of radio, television
or recorded music in a public place, as well as live performances. Music licenses give businesses a convenient way to obtain
permission for public performance without contracting with each copyright
holder individually. They enable songwriters, composers and music publishers
(not performers) to protect their copyrights and collect royalties for
use of their works. Each of the licensing companies contracts with different
songwriters and publishers, so a license with all three allows businesses
to play songs by almost any artist in a wide range of styles and time
periods. Licensing with all three costs a minimum of $485 per year
for retail establishments and can range into the thousands of dollars,
depending on the size of store and type of music used (audio only, audiovisual
or live). Exemptions The federal Sonny Bono Copyright Term Extension Act of
1998 expanded and clarified previous exemptions for businesses playing
music from a radio or television broadcast. At the urging of MRA and other
retail groups, the legislation added exemptions for retailers playing
music for demonstration purposes. The Michigan Legislature passed a code of conduct for
music licensing companies in 2000 that requires them to provide potential
licensees with a schedule of rates, a list of the artists and works they
cover (if requested) and a notice that some businesses may be exempt.
Grothe said BMI is attempting to inform retailers of their
legal obligations, not force them to sign a contract. He said his staff
members are instructed to discuss alternatives that are covered by exemptions
and don’t require payment. “Most establishments just don’t know that they
need permission to publicly perform copyrighted works,” he said.
“Ours is not to try to trick someone into signing a license they
don’t need. If we’re forthright about our efforts, a large percentage
of business owners choose to exercise their rights within the law.” Grothe said retailers who use music in their stores should
consult with an attorney to determine their potential liability. He also
advised retailers who are contacted by BMI not to be intimidated into
signing a contract without determining an appropriate music policy for
their store. “They should demand of BMI a discussion of all the
options,” he said. Penalties Larry Leigh, owner of Leigh’s and Mettie’s women’s
clothing stores in Grand Rapids, found out the hard way about penalties
for unlicensed music use. Several years ago, he received a letter from
ASCAP stating that he was violating copyright regulations by playing tapes
and CDs in his stores. Leigh ignored the warning because the business that installed
his store stereo system assured him he didn’t need to worry. Two
years later, however, he was sued by ASCAP for $400,000. When his attorney
informed him that his chances of winning the suit were not good, he settled
out of court for a $5,000 fine. He now uses a music service that costs about $200 per
year for each store - less than the cost of licensing, and definitely
cheaper than lawsuits and legal fees. Despite his troubles with ASCAP, Leigh continues to believe
in the benefits of music. “I definitely think music is important in the store,”
he said. “It’s an atmosphere creator. Walking into a store that’s
dead is intimidating to customers.” The right music can help convey a store’s desired
image and encourage shoppers to browse and buy. Retailers must weigh the
benefits of using music against the costs and potential legal consequences.
Those who fail to harmonize with copyright regulations could find themselves
singing the blues. |
Music regulationsIn general, businesses must obtain permission to play copyrighted music in a public area. This includes live, recorded and broadcast music. There are some exceptions, however. The following regulations
apply to retail stores only. Check with an attorney for a complete assessment
of your situation. Radio and TV Recorded music On-hold music Background music services Live music Music demonstration Admission fees |
