Beware Restaurateurs: Michael Jackson Could Cost You $40,000

Categories: Restaurant News
michael jackson550.jpg
Hiteshsharma
We bet this restaurant in Dhaba, India didn't pay license fees
If you own a restaurant, beware Michael Jackson and R. Kelly.

Play their music -- or any other copyrighted songs -- in your restaurant or business without the proper license and you can face fines of $10,000 per song.

Fosters American Grille in Raleigh, N.C., played songs by those two artists -- and two others -- and lost a lawsuit last month that cost $30,450 in fines and $10,700 in attorney's fees.

To be exact, that's $10,287.50 per song.

How likely is that to happen in San Francisco?

SFoodie called a number of local restaurants to find out about their music policies. Most of the ones whose managers spoke to us appear to be legally covered, but we wonder about the ones we didn't reach.

Under copyright law, playing copyrighted music (even from a legally purchased source like a CD) in a public place such as a restaurant constitutes a "public performance" of the music. That public performance designation means the restaurant owes money to the licensing companies, which in turn pay some percentage of that to the band or artist as royalties.

BMI, ASCAP, and SESAC -- the three major licensing companies -- have scouts that look for newly opened restaurants and check in on other venues to make sure their licensing is legitimate.

For Benu, a music license was something management didn't consider when planning the opening, said administrative manager Carey Snowden. But right around the time of its debut, the restaurant received a notice from ASCAP asking for a licensing fee, and Benu complied with the request. Snowden said she didn't think anyone from ASCAP visited the restaurant in person to check up before sending a notice.

Our quick informal survey of some S.F. restaurants shows that they use several legal options to avoid liability.

25 Lusk uses a DirecTV subscription specifically for businesses that incorporates copyright licensing fees, according to General Manager Chad Bourdon.

RN74, a wine bar and restaurant, uses the Playlist Generation, a music curation service that also wraps copyright fees into its service price.

"It's the biggest hurdle restaurants come up against," said Director of Partnerships Alex Bird. "People are used to getting music for free," but it doesn't fly in a business setting.

Hillstone restaurants are part of a larger chain and have a staff member dedicated to music selection for all restaurants. The company pays the licensing fees for the music directly.

Andalu uses satellite radio. Resturant owner Calvin Schneiter says he pays for a commercial subscription that pays licensing fees on behalf of the subscriber.

Prices can vary widely for a direct licensing fee from any of the three companies as well as for anyone who'll license for you. Restaurant mangers said factors such as total number of seats, number of speakers, and "variety" of programming (such as brunch versus dinner music) can affect the price.

BMI sent Fosters a bill -- which it didn't pay -- for $6,060 per year. That's pricey, but it's still less than $40,000. Michael Jackson doesn't come cheap.

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3 comments
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Pfslow
Pfslow

This has a few minor errors but is basically correct. Those who own the music have a right to be paid for the performance. It is not free nor should it be.

Stephen Hunter Field
Stephen Hunter Field

This is slavery and needs to be abolished. 

Scroggin
Scroggin

Slavery?

This is actually a key source of income for many musicians... their earnings roughly breakdown from most to least:

Performing/GigsMerchRoyaltiesAlbum/single sales.

Obviously if you're a more 'popular' musician your royalties (from radio, night clubs, restaurants or even commercials) may take a larger slice of the pie than any merch or revenue from ticket sales.

However it's not just the musicians that earn money, it's often the label, the producer, songwriters, manager... the list can go on depending how the recording/deal has been made. 

Without this avenue of income, many musicians and those working in the music industry would not be able to survive.  In fact, performing rights are found the world over - at least in western countries.  I will admit though that the system in the US is a bit of a joke.  Many other countries have one single non-profit body that represents all musicians. Restaurants and the like pay an annual fee, calculated often on the size and capacity of their establishment and are required to submit a playlist (of songs played) every quarter or so.  The body then takes the money and redistributes the royalties collected based upon the playlists, radio play and to an extent charts).  Simple as that.  If you want to use a song in a movie or ad, then you just go to the owner of the recording directly and license a deal that way.

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