Owners of bars, nightclubs, restaurants and other venues that play background music or have live music at their establishments should take note of the Ninth Circuit’s decision last month in Range Road Music v. East Coast Foods where it held up a large award against a restaurant that refused to pay a licensing fee for the music it played in its business. Even more frightening than the $198,000.0 award for misuse of eight (8) songs, was the court’s decision that the owner and operator were personally liable for the fees and damages.
The case involved a jazz club named Roscoe’s in Long Beach California, which opened in 2001. Shortly after it opened, ASCAP contacted East Coast Foods, the operating company of the bar, to offer it a license to perform music by ASCAP members at the restaurant and lounge. ASCAP is a “performing rights society,” a nonprofit organization that licenses the music of its members and collects royalties whenever that music is performed publicly. BMI and Soundscape are the other two prominent ones that composers and musicians use to collect licensing fees for their works. East Coast did not purchase a license, and between 2001 and 2007 East
Coast ignored repeated requests from ASCAP to pay licensing fees.
In 2008, ASCAP sent a private investigator to visit Roscoe’s and write down some of the music he heard being performed there. (OK, so, how do you get THAT job?). The investigator went in one night and saw the band play four John Coltrane songs, and heard the DJ play four songs from a group called Hiroshima. The investigator testified that the band announced the names of the songs they played during their “Coltrane” set and that he jotted the names of the Hiroshima songs from the CD jewel case next to the DJ station. All eight songs are licensed through ASCAP. And that’s all the evidence it took for ASCAP to win.
Th court set damages at $4,500 per song. This number was likely so high because the bar was making revenue off the music and was not just using it for personal use. The court also likely took into consideration the size and business volume of the venue to determine what would be an appropriate penalty. But the real whammy came when the judge concluded that because the defendants had ignored repeated attempts by ASCAP to have the bar pay its licensing fees, the infringement was willful and therefore the plaintiffs were entitled to their attorney’s fees, which came to $162,000.00. Moving on to the bar owner, the court said that since he had direct control and managerial authority over the venue, bought the liquor for the place, signed the liquor license, etc., he was personally responsible for the infringement as well.(ASCAP could have also sued the band that played the four Coltrane songs but did not do so).
ASCAP generally charges around $900 per year to play its licensed music. Multiply that by 3 (for BMI and Soundscape ) and bars are looking at $2,700 per year in licensing fees. Occasionally, they may also want 10% of the gate if you are regularly charging entrance fees and live music is played. Venues all around the country have been receiving demand letters from one of the three (or all three). In the cases I have been involved in, I have always recommended reaching an amicable resolution of an appropriate annual fee to pay and be done with the issue. It is impossible to claim that you had no idea that music was copyrighted and protected by licensing agencies, especially when you are in the business of providing music at your venue and you get letters from the agencies demanding fees!
Pay a little now, or pay a lot later. Hardly music to a bar owner’s ears.