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Wednesday
Sep142011

Would You Sue a Restaurant for $30,000 If They Didn't Pay You Royalties?

This makes me queasy:
Restaurant Owner Ordered to Pay BMI $30,450 For ‘Illegally Playing’ Four Unlicensed Songs

This is not about feeding musicians, it’s about feeding the “Royalty Collection Agencies”.
BMI began sending communication regarding the restaurant’s lack of proper licensing back in September of 2009, but it wasn’t until May of 2010 that BMI even bothered to visit Fosters to verify that the business was actually playing unlicensed music. (From page 32 of the PDF.)
So without verifying anything, BMI starts demanding payment from a restaurant for “Piracy”.

This is how the mafia demands “protection”.

To which BMI would retort: “But it’s all ‘For the Artists’!”

Would you sue a restaurant out of business for playing your songs and not paying you a few dollars?


Of course not, that’s terrible business! The restaurant is playing your music to a captive audience, this is a good thing. From psychology we know that people prefer things more simply by repeated exposure. (The Mere Exposure Effect)

From Wikipedia:
In studies of interpersonal attraction, the more often a person is seen by someone, the more pleasing and likeable that person appears to be.
Music is marketing material, not the profit driver it once was. You want more people listening to your music, this is a good thing!

The traditional performing rights organizations (BMI, ASCAP, SESAC) are scared; the era of terrestrial radio domination has passed as competition for ear-time has shot up exponentially. They somehow decided it wasn’t important to deal with the issues of streaming internet radio, satellite radio, and cable TV so now SoundExchange swooped in to become the only entity in the US allowed to collect digital royalties.


Oops. Their business model just got OWNED.



Better start suing fans!

These traditional performing rights organizations made sense thirty years ago, but not anymore. Without the concentrated market of old-school radio, songs don’t get as famous as they used to since people listen to what they demand, not what they’re fed. (Jeff Bridge’s new album sold only 13,000 copies, which is now enough to break into the Billboard top 25!) Without monster-hit songs, the amount of royalties collected on a per-song basis will continue to drop, shrinking the margins of these agencies as they have to chase down royalties for more songs for less pay. Unless they fundamentally change their business model, I don’t see traditional performing rights organizations having an important role in the future of music.

My suggestion? While I’m registered with ASCAP, I’m not counting on the $50 registration breaking even. SoundExchange will probably play a bigger role in your career, so I’d make that a priority over traditional performing rights orgs. Still, I don’t really figure royalties into my business plan as they’ll only become significantly large long after I’m making better money from other income streams.

P.S. Don’t you love how the term “Royalties” carries such a connotation of entitlement to it?
—-
Derek is an MBA who writes weekly music business advice at DerekThinksMusic, plays bass for Onward We March, and works with the DFW-based arts group ArtLoveMagic.

Would You Sue a Restaurant for $30,000 If They Didn't Pay You Royalties?

References (1)

References allow you to track sources for this article, as well as articles that were written in response to this article.

Reader Comments (15)

"The traditional performing rights organizations (BMI, ASCAP, SESAC) are scared; the era of terrestrial radio domination has passed as competition for ear-time has shot up exponentially. They somehow decided it wasn’t important to deal with the issues of streaming internet radio, satellite radio, and cable TV so now SoundExchange swooped in to become the only entity in the US allowed to collect digital royalties."

Do you have any idea what you are talking about?
SoundExchange collects royalties for labels/artists. The "tradiional perform rights organisations" collect royalties for composers. And they have been collecting "digital royalties" from "streaming internet radio, staellite radio and cable TV" for many years.

September 14 | Unregistered CommenterJ.Branca

would you sue a club if you played to their patrons and you didn't get paid? i am guessing you'd shit bricks if you did a bang up job and got stiffed. simply, restaurants are using the music to entertain their diners, who are paying to eat and drink there. the restaurants are making money using copyrighted material. they need to pay for the right, or go silent. they can pay bmi or ascap, but they need to pay to use copyrighted material.

September 14 | Registered CommenterDavid Greenberg

I agree that in this case the PRO's methods leave little to be desired, but I resent the tone of this article that an artist is somehow not entitled to royalties for the use of their music by another business.

The collecting agencies business practices to collect that money is a seperate issue. Don't use it to imply that artist don't deserve to get paid for the use of their work by another business.

Also, I am a member of ASCAP and their is NO $50 dollar registration fee to join (as your article states). It is free for artists to join.

September 14 | Unregistered CommenterTJR

So, BMI, ASCAP, and SESAC are bad but SoundExchange is good? I've been with SoundExchange for over a year and I have heard my music played on internet radio like Spotify, last.fm, jango, turntable.fm and have not recieved a dime. BMI on the other hand has consistently paid me every quarter for the past 5 years. And I've never had a hit record. I'll stick with BMI.

September 14 | Unregistered Commenterlogisticalstyles

This is an amateur article that belongs in MTT Open, if anywhere. Sorry to be curt, but the other comments attest to this.

MTT needs to pick up the quality of its official article's if it's going to keep readership. Not to mention fixing the comments section so it doesn't take 3 hours for your comment to appear.

September 14 | Unregistered CommenterJustin

You should get your facts straight before you post opinionated garbage.

September 14 | Unregistered Commentercarrie

Thank you for the feedback. We will continue to strive to pick quality articles to be featured on MTT. As for the comments, we are trying to figure out how to manage the section in order to prevent spam comments from being posted. If you have any suggestions, please let us know here at MTT.

Thanks,

Natalie
MTT Community Manager

September 14 | Registered CommenterMusic Think Tank

"Would you sue a restaurant out of business for playing your songs and not paying you a few dollars?"

Not necessarily, but you have a right to expect to be properly remunerated, unless you have explicitly offered your music to the restaurant for free usage. If the restaurant is consistently not paying for services it uses, it indeed should be out of business, just the same as if it failed to pay its liquor license, rent, etc.

A restaurant is using music to promote its business. The musicians involved have a right to get paid. This is a horribly misguided article.

- Versus

September 15 | Unregistered CommenterVersus

Well... I was going to comment about how ludicrous this article is, but luckily the MTT community has set the record straight in their comments above. Thanks guys!

How did this article get past the editor?

September 15 | Unregistered Commenterpaulplaysguitar

I too resent the tone of this article. Derek doesn't really understand how PRO's fully work and that's typical of those who think they are entitled to have a voice and opinion on these issues. I suggest you actually visit your PRO office or take the time to read their website and learn about all of the performance collections they perform. To say they are obsolete and need to change the business model is the epitome of ignorance and you have no business ever opening your mouth or laptop on these issues if you continue to write tabloid trash.

BMI and ASCAP (I'll leave SESAC out) have a history of terrible research and enforcement of blanket licenses for restaurants and similar venues. a 30k bill is probably padded and not conducive to encouraging licensing. This does not negate the FEDERAL legal and moral obligation of a business to procure all necessary licenses and permissions when opening and operating.

It's sad that Derek Miller has been given a tabloid voice and that there are followers willing to accept this as good information.

September 15 | Unregistered Commenter(Pesci) Jeff Gray

"Don’t you love how the term “Royalties” carries such a connotation of entitlement to it?"

Yes, I do.

The "entitlement" you arrogantly mock can be succinctly stated as follows: One has a right to get paid for one's honest work and service.

- Versus

September 15 | Unregistered CommenterVersus

"Music is marketing material, not the profit driver it once was. You want more people listening to your music, this is a good thing!"

This promotion argument appears in various forms, and is simply a rationalization of theft. Of course musicians want to expand their audience; at the same time, (professional) musicians want and deserve to be paid for their services. One purpose does not negate the other.

If the argument were sound, it could just as easily be applied everywhere. The restaurant does not need to pay for its liquor either, since it is providing free promotion for the liquor brands. The restaurant does not need to pay its chef, since it provides free promotion for his/her cooking skills. Etc. etc.

People also rationalize piracy in a similar disingenuous manner, and convince themselves they are actually doing the artist a favor by listening to pirated music. One (supposedly) good deed does not justify a misdeed on the other hand. Good intentions are not enough; actions are what matter.

It is up to individual creators to decide whether to sell their work or give it away for free. If you are a professional musician, composer, creator - that is, one who has to pay their bills and whose livelihood is music, then the decision is made.

- Versus

September 15 | Unregistered CommenterVersus

I'm very clearly in the wrong here.

I apologize, but I'm glad everyone was willing to set my opinion right.

September 15 | Registered CommenterDerek Miller

@logisticalstyles: did you actually REGISTER with SoundExchange? I did, and filled out out a crap-load of paperwork, and a few months later they dropped about $200 into my bank account. More than I got from ASCAP after having one of my songs played over ONE THOUSAND times by a local radio station. I'm thinking about switching to BMI, but that is another can of worms in itself.

Anyway, I say SoundExchange rocks!

September 15 | Unregistered CommenterRavingLunatic

Hey Derek,

Good on you for admitting your mistakes, sometimes you gotta breathe your ideas out loud and sometimes they don't make much sense. At least you can admit that and move on to newer and better ideas. I wish more "gurus" in the music business were open to their ideas being wrong / needing improvement.

We've all got lots to learn

September 20 | Unregistered CommenterDavid Cavan Fraser
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