Would You Sue a Restaurant for $30,000 If They Didn't Pay You Royalties?
September 14, 2011
Derek Miller in Royalties, music licensing, piracy

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?
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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.
Article originally appeared on Music Think Tank (http://www.musicthinktank.com/).
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