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How To Reduce Your Licensing Fees to the PROs

We’ve previously discussed the necessity of club owners and restaurateurs to pay the Performing Rights Organizations (“PROs”) for use of live and recorded music. Depending upon the egregiousness of the failure to pay, the obligation might not be dischargeable in bankruptcy. So, if you’re not licensing the music, what can you do when you get the dreaded demand letter and threat of litigation from ASCAP, BMI or SESAC? You may have some room to negotiate.file0001631184133

Of the three PROs, ASCAP is the most litigious. For example, in May 2015, ASCAP filed copyright infringement suits against seven recalcitrant clubs and restaurants across the country (including one in Atlanta, GA). And while, as a club owner, it may seem unfair to have to obtain licenses from each of the three PROs, bear in mind that by playing unlicensed music, the club is getting a free ride at the expense of the songwriter.

ASCAP President and Chairman, songwriter Paul Williams (check out Paul Williams in the high-camp bomb, Phantom of the Paradise) noted: “We want every business that uses music to prosper, including bars and restaurants. After all, as songwriters and composers, we are small business owners, too, and music is more than an art form for us. It’s how we put food on the table and send our kids to school. Most businesses know that an ASCAP license allows them to offer music legally, efficiently and at a reasonable price – while compensating music creators so we can earn a living from our work and keep doing what we do best – writing music.”

I’m no shill for the PROs, but I understand their position. Even performing one song without a license is likely a copyright infringement. But a club or restaurant can control their license fees, and here are a few ideas to help you limit them:

  • Make sure that the maximum occupancy of your business as determined by the local fire marshal is accurate, since this is one of the factors in the fee equation. Typically, the PRO factors in charges for various scenarios and multiplies that total by the total maximum occupants. Don’t let the fire marshal impose a maximum occupancy that doesn’t truly reflect the realities of your club.
  • If you have karaoke or DJs, you must license the music. So consider whether it is cost-effective to host Open Mic or karaoke nights.
  • If you use pre-recorded music that you don’t already license through, e.g., Pandora, then you’re required to obtain a license. So, consider using only licensed streaming services for all your recorded music.
  • If you host live music, consider using only local bands playing their own original music. Naturally, the PROs are suspicious of “Originals-only” music presentation, as they cannot comprehend that the bands don’t also play a cover song here or there. In my experience, most original bands do have a few cover songs up their sleeves; if they play even one, that’s sufficient to invoke the licensing requirement. Make a point of posting notices to the band that only original music is permitted, and absolutely no cover songs may be performed. Serious original bands may welcome the opportunity to present only their own music.
  • The fees for live music rise depending upon frequency of occurrence. E.g., ASCAP charges a higher rate for live music performed 4-7 nights a week, as compared to 3 or fewer nights.
  • If you charge a cover charge, even if only occassionally, the licensing fee goes up. So consider an across-the-board No Cover policy.
  • Got a jukebox? You’ll have to license the music.

If you get an unwelcome Nastygram from one of the PROs, contact an experienced attorney to help you navigate a resolution. A court judgment against you in a copyright infringement suit, which may include triple damages as well as punitive damages, could be devastating, and may not be dischargeable in bankruptcy.