How to Prevent Music Licensing from Crushing Owners & Operators

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Do you play live music at your bar, nightclub or restaurant? Do the hospitality venues of owners and operators you frequent, partner with or otherwise respect and support offer live music?

If so, John Bodnovich wants you to get active, step up, and tell Congress to #KeepTheDecrees. Bodnovich, executive director for American Beverage Licensees, is concerned with the current state of music licensing. As he sees it, there’s a lack of transparency regarding music licensing that keeps operators in the dark and at risk for large fines.

#KeepTheDecrees seeks to convince the Department of Justice to keep consent decrees that the American Society of Composers, Authors, and Publishers (ASCAP) and Broadcast Music, Inc. (BMI) first signed in 1941. (A consent decree is “a mutually binding agreement between two parties to resolve a dispute.”) ASCAP and BMI agreed to sign consent decrees voluntarily almost 80 years ago after they were sued by the DOJ for antitrust violations.

ASCAP and BMI control around 90 percent of performance rights licenses. To put it bluntly, the two performance rights organizations (PROs) are permitted to operate as a monopoly legally. They’re allowed to do so if they abstain from price fixing, collusion and other antitrust violations.

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From time to time, the decrees have been reviewed and amended in accordance with shifts in how people received and experienced music. BMI’s consent decree was last amended in 1994. The ASCAP consent decree was amended last in 2001. As of last year, however, the DOJ has been considering terminating the consent decrees altogether.

To explain why this should matter to operators and why they should let their Congressmen and Congresswomen know why they want the decrees to remain, consider this example provided by Bodnovich at the 2019 Nightclub & Bar Show:

  • ABC Bar & Grill provides live music to guests. The venue refuses several attempts by a PRO (ASCAP, BMI, SESAC, Global Music Rights) to sign a public performance licensing agreement. ABC Bar & Grill keeps on providing guests live music.
  • The PRO visits ABC, listens to the live music being played, and now has proof that music licensed by the PRO was played without a license. The PRO files a claim against ABC alleging the business has engaged in the willful infringement of a copyrighted musical work, a violation of 5 USC § 504(c), which protects the owners of musical copyrights from infringement and entitles them to statutory damages.
  • The PRO seeks up to $150,000 in damages per infringed song that is played.

Some operators may refuse to enter into public performance licensing agreements because they feel there’s a lack of transparency from a PRO. According to Bodnovich, that feeling isn’t confusion or paranoia, it’s real. Business owners are required to obtain a license so they can play music in their venues…but there’s no available resource that makes it clear what copyrighted works are covered by a license.

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Bodnovich says that relationships with PROs are one-sided, and not in favor of the business owner. Here are just a couple of the quotes from owners that Bodnovich shared with Nightclub & Bar Show attendees:

  • “BMI, ASCAP and SESAC are literally destroying local and original music; they harass you beyond belief, but cannot answer or give you any information about the simplest questions.”
  • “ASCAP, BMI and SESAC operate like criminal enterprises. The copyright law needs to be eliminated, and a fair system has to be put in place; they are destroying bars/restaurants and small businesses.”

If the DOJ terminates the ASCAP and BMI consent decrees, bar, restaurant and nightclub owners may very well find themselves in a much worse situation with PROs. With the consent decrees, there’s efficiency, fee collection, and pricing equality, and there are non-discriminatory checks and balances in place. Without those decrees in place, operators should be very concerned that ASCAP and BMI will be free to act as unscrupulous monopolies.

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So, what can you do in light of the DOJ’s consideration of terminating PRO consent decrees? You could attempt to modify music practices or negotiate ASCAP, BMI and other PROs. Or you could just ignore the PROs, but the example given earlier shows that to be a bad idea.

Bodnovich, however, believes the consent decrees must stay in place. That means operators need to get active and tell Congress to #KeepTheDecrees in place. Better for the DOJ to review the ASCAP and BMI consent decrees, and amend them if they feel doing so is necessary than to open the door for possible antitrust practices that can cost bar, restaurant and nightclub owners their businesses.

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