11 questions about music licensing

Music is one of the most important elements in establishing the mood in your restaurant, but under law, you must make sure you have the necessary licensing to comply with copyright statutes before playing it. Performing rights organizations (“PROs”), such as BMI, ASCAP and SESAC, act as intermediaries between restaurants and songwriters to protect intellectual property and make licensing more cost-effective and convenient. Restaurants pay a fee to the PROs for a blanket license that grants permission to use all of the music each organization represents, and they, in turn, distribute the fees, less operating expenses, to their affiliated songwriters, publishers and composers as royalties.

Here are answers to frequently asked questions about music licensing:

Q. If I pay a licensing fee to BMI, do I have to pay one to ASCAP as well?
A. It depends. If you know that all of the music you’re playing in your restaurant is under the copyright licensing of BMI, then the answer is “no.” However, if that music is licensed by either of the other two major licensing entities, ASCAP or SESAC, the answer is “yes.” If you aren’t certain about what music may be played, it’s safest to have licensing agreements with all three PROs – BMI, ASCAP and SESAC.

Q. What are the exemptions for radio and TV?
A. Federal copyright law, Section 110 (5)(B), exempts restaurants that play music transmitted via radio, TV and cable and satellite sources if they don’t charge to hear the music. Music played by other means, such as live bands, CDs, etc., aren’t covered by the exemption.

The 411 on music licensing for restaurants

Music licensing companies collects license fees on behalf of songwriters, composers and music publishers and distributes them as royalties to those members whose works have been performed. Restaurants or businesses that play music from recording artists or have live musicians performing previously recorded music must pay license fees to these companies. The three largest companies that license music are BMI, ASCAP and SESAC. Businesses may periodically receive requests for payment from these companies. It is important to pay what is owed to all three companies. Late fees and penalties for non-payment could add up to, in some cases, thousands of dollars.

Musicians are frequently hired to perform at restaurants and bars. Many times, the Louisiana Restaurant Association gets asked the question: Why should my business be responsible for a licensing fee for the music that is played, when the musician is the one performing the song? A short, simple answer to that question is that your business is receiving a benefit from the live music being performed there.

Background music played over a sound system can provide ambiance to a restaurant. To mitigate the costs of that form of entertainment, restaurants can purchase a business package from a music service, a cable company or satellite radio company. The contract should stipulate that the company from which you are buying the service is responsible for any music licensing fees.

BMI

Broadcast Music, Inc. currently represents some more than 6.5 million compositions — a number that is constantly growing. As a result, BMI has, over the years, implemented a number of technological innovations in its continuing effort to gather the most accurate information available about where, when and how its members’ compositions are played or performed, as well as ensuring that royalty payments are made in as precise and timely a manner as possible. Call at (800) 925-8451 or visit www.bmi.com.

The Louisiana Restaurant Association (LRA) has partnered with BMI to provide an association discount program. Members receive a:

• 5 percent discount on BMI licensing fees
• 5 percent online discount for licensing and/or paying at www.bmi.com/ede
• 10 percent timely payment discount for paying your fee in full within 30 days of invoice

ASCAP

The American Society of Composers, Authors and Publishers is a membership association of more than 410,000 U.S. composers, songwriters, lyricists, and music publishers of every kind of music. Through agreements with affiliated international societies, ASCAP also represents hundreds of thousands of music creators worldwide. ASCAP is the only U.S. performing rights organization created and controlled by composers, songwriters and music publishers, with a Board of Directors elected by and from the membership. Visit www.ascap.com.

SESAC

Formerly the Society of European Stage Authors and Composers, SESAC was founded in 1930 to serve European composers not adequately represented in the United States. Though the company name was once an acronym, today it is simply SESAC and not an abbreviation of anything. With an international reach and a vast repertory that spans virtually every genre of music, SESAC is the fastest growing and most technologically adept of the nation’s performing rights companies. Visit www.sesac.com. 

BMI: The Bridge between Music Creators and the Businesses that Use Music

Louisiana Restaurant Association members receive a 20 percent discount of music licensing fees by paying online.

There is no doubt that music is one of the quickest and easiest ways for restaurants to establish atmosphere and ambiance. But what many restaurant owners and managers have long known is now being supported by research: Music not only establishes ambiance, it also serves as a powerful tool for driving profits.

According to the Gallup Organization, one restaurant study revealed that low-tempo music can increase per dinner party bar sales 40.9 percent, and that patrons stay 24 percent longer when slow tempo music is played. Restaurant Management Magazine reported on a test titled "The Influence of Background Music on Restaurant Patrons," which revealed sales increased 11.6 percent when up-tempo music was played during lunch. Sales increased 15.7 percent when slower tempo music was played during dinner.

Music branding—the process of compiling playlists to suit an establishment’s brand and positioning--has become an increasingly popular consulting service, with a host of companies advising establishments on the right soundtrack to drive real business results, strengthen customer loyalty and enhance the dining experience.

To facilitate and simplify the process of licensing music for their members, more and more restaurant associations are partnering with Broadcast Music, Inc. (BMI)—and availing members of discounts as high as 20 percent off licensing fees.

Making sense out of music licensing

There’s not a week that goes by at the Louisiana Restaurant Association (LRA) that we don’t get a few calls from members asking about music licensing. The most common questions are if they have to pay to “license” the music they play. They ask, “Do I really have to pay license fees on the music I am playing in my establishment?” Typically, the answer is “yes.” The following will help put the issue into perspective.

Q. Why should I pay for playing music to the public? Legally, a piece of music belongs to the composer who created it and to the music publisher who markets it. When you use other people’s property, you have to ask their permission to do so.

Q. What is a “public performance” of music and what is the “performing right?” A “public performance” is a performance that occurs in a public place or in any other place where people gather (other than a small circle of a family or acquaintances). A public performance is also one that is transmitted to the public; for example, radio or television broadcasts, music-on-hold, cable television or by the internet. Generally, those who publicly perform music must obtain permission to do so from either the owner of the music or his or her representative.

Q. If musicians are playing live music, aren’t they responsible for paying the public performance fees? People mistakenly assume that musicians and entertainers must obtain licenses to perform copyrighted music or that the business where the music is performed can shift that responsibility to the performers. The law says that all of those who participate in, or are responsible for, the performance are legally responsible. Since it is the business owner who obtains ultimate benefit from a performance, it is the business owner who must obtain the license.  Music license fees are just one of the many costs of doing business.

Q. I’m interested in having music played in my restaurant. Do I need permission if I am only using CDs, records, tapes, radio or TV? Yes, you need permission to play CDs, records, or tapes in your establishment. Permission for radio or television transmissions in your business is not needed if the performance is by means of public presentation of TV or radio transmissions. Eating, drinking, retail and certain other establishments of a certain size may play public radio and TV signals over a limited number of speakers or TVs if the reception is not further transmitted (from one room to another, for example) from the place in which it is received. No admission fee can be charged.

Q. My establishment is very small. Do I still need to pay for music licensing? You are required to get a music license if:

·         You play video games with music tracks (such as Guitar Hero)
 

·         Your establishment is 3,750 square feet or larger (foodservice or drinking     

            establishment), plays the radio or TV, and (has at least one of the following):

o   Has more than four TVs total, or more than four TVs in any one room

o   Has any TV with a diagonal screen size greater than 55 inches

o   Any of the audio portions of the audiovisual performance is communicated by means of more than six loudspeakers or there are four loudspeakers in any one room or adjoining outdoor space

o   There is a cover charge

o   You allow live music or open-mic performances

o   You provide a deejay to play music

o   You allow customers to play their own music devices (such as iPods) through your sound system
 

Q. I have one license. Doesn’t that cover all the music I play? You can—theoretically—license with just one of the three major companies (BMI, ASCAP and SESAC). But, doing so limits you to using only those titles to which that one company hold the copyrights. While each company has a repertoire of over a million pieces of music, it would be very difficult to play only the music controlled by any one of the music licensing companies. How would you even begin to keep track?

Q. Aren’t TV, cable and radio stations already licensed with BMI? The agreements for broadcasts apply to private use rather than public use. When you broadcast the radio or television in your establishment, it constitutes a “public broadcast” –a public use.

As a member of the LRA, you are eligible for a 20 percent discount on licensing services through BMI.

LRA members get:

·     10 percent discount for being a member of the LRA.

·     An additionally 10 percent discount if you pay for your music licensing through BMI’s website.

In addition to discounts on licensing by BMI, the LRA has other member value programs to help you save:

·         Workers’ compensation program

·         ServSafe food safety and sanitation courses

·         Alcohol server training (bar cards) through Louisiana’s BEST

·         Free admission to the Louisiana Foodservice & Hospitality EXPO for restaurants.

·         Credit card processing through Heartland Payment Systems

For more information on the various member value programs, call the LRA at (504) 454-2277.