What's in a License?

The lowdown on music licensing, or why cover bands can play some venues and not others

A few years back, local venue Plush used to do something called Tribute Nights, where local musicians would learn the songs of a featured artist, and perform three-song sets.

But then one day the Tribute Nights just stopped. Rumors surfaced about legal issues pertaining to copyright infringement. And local musicians who wanted to play a cover had to get their set lists checked by Plush in advance. Even recently, confusion still existed about whether or not live bands can play cover songs.

The reason?

It's not as easy as one would think to perform someone else's music in a live setting, even when it's for charity. And for live venues like Plush, where the majority of live music played is original work, negotiating the terrain of music licensing can be a sticky wicket.

Under U.S. copyright law, any public performance of a piece of music, whether recorded or performed live, is owned by the original creator of the work. The law defines a public performance of a work as "to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered."

This law goes back to a legal precedent from 1917 set by Herbert v. Shanley that established the monetary value of music being performed in a public venue.

Any venue that plays music written by someone else has to pay what's called a licensing fee to one or both of the major non-profit music performing rights organizations in America, BMI or ASCAP. (A third, much smaller, for-profit organization, called SESAC, also exists). These fees allow an establishment full access to the work of any member artist, which includes the performance of a cover song by a live band. BMI and ASCAP each control approximately half of the music rights in the United States. The responsibility for paying the fee falls upon the owners of the venue, because they're the ones who have the most monetary gain from a public performance. The main goal of these licenses is to protect the songwriters and composers from copyright infringement.

Vincent Candilora, senior VP of licensing at ASCAP (American Society of Composers, Authors and Publishers), put it this way: A song "is someone's property, if you will. It's like any other property law: If someone's going to use your property, they need your permission, and they ought to pay you something." The licenses are a quick way for businesses to comply with copyright law, and a quick way for songwriters and composers to collect royalty fees for public performances of their work.

But for Maebelle Reed, owner of Plush, paying the fees didn't fully fit with their mission.

"Plush was originally under the good graces of ASCAP and BMI as we paid them lots of money and had contracts with them to continue to do so," Reed explained via e-mail. "Several years into operation it became obvious that we were paying them for music that was NOT being played at Plush, because the lion's share of the music played was written and performed by the artists themselves, and were not covers of other artists' material. We renegotiated with ASCAP easily but BMI refused to do so and also refused to cancel our contract."

Eventually, Plush came to an agreement with BMI, and, said Reed, "we can now be lenient when an artist plays a cover."

Another local business, Chuy's, recently ran into trouble with licensing. They settled in May with BMI for copyright infringement charges involving the playing of 14 recorded songs at the Valencia location.

The owners of Chuy's, Adobe Management Services LLC, could not be reached for comment.

Jerry Bailey, senior director of media relations and business communications at BMI (Broadcast Music Inc.), said, "We're not out there trying to sue business owners—we really don't want to do that. ... Our goal is to insist that they do comply with the law. We're very careful on our end to comply with the law and we want them to do the same thing, but there will always be some of them who treat it as a game and try to procrastinate as long as possible, and that wastes everybody's time and money, and ultimately this is money that could go back into the pockets of the copyright owners, the songwriters and publishers."

The idea that music has a monetary value is one that musicians and venue owners understand, but not always when it comes to the fees organizations like BMI and ASCAP charge. The license fees are based on posted fire department occupancy rates, and vary depending upon the number of nights music is performed and the type of music that is performed (live or recorded).

Both Candilora of ASCAP and Bailey of BMI contend that the fees are not exorbitant.

"Both BMI and ASCAP operate under consent decrees from the U.S. Dept. of Justice because we each control the licensing of such a large part of music in America," said Bailey. "We have consent decrees that require us to treat businesses of the same class and category the same way, so that we can't give a sweet deal to a club on one corner and give a different deal to the club across the street. We don't negotiate the licenses; the license fee is the license fee. Some business owners don't like that, but we're required to do it that way."

Club Congress, where the annual Great Cover-Up is held, holds licenses from BMI, ASCAP and SESAC, said entertainment director David Slutes. "We understand that in our industry, this is part of doing business," he said via e-mail. Even though an event like the Cover-Up benefits a charity, if the bar or club collects profits from drink sales or food sales, the establishment must hold a license.

But when a venue mostly books bands that play their own songs, is a music license really necessary? Both Bailey and Candilora contend that on a deeper level, it's about placing value on music. "The bottom line is that music does add a great value to most businesses, or they wouldn't offer it," said Bailey.

But Reed argued that as much as the system tries to be fair, it's not. "Even though there is some rational system for assessing who gets what from the royalties fees that are collected, the division is unfair to say the least," she said. "Plush exists for the small, new and lesser-known to have a place to play, yet the money that Plush pays to the licensees goes to the big artists."

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