If Kings Barcade owners Ben Barwick, Steve Popson and Paul Siler want to stay current on their BMI account this year, they'll have to shell out $1,811.75 in music licensing fees. To many business owners that's pocket change, but not for these guys. All three still rely on day jobs to supplement what little they earn running their downtown Raleigh club. The BMI bill is one they simply can't afford to pay.
The Kings owners understand the concept of licensing fees--all three are also BMI affiliated songwriters and either receive or have received small royalty checks for the use of their music. What they have a problem with is the way in which the royalty system is structured. They are not alone. Owners of other small clubs in the Triangle such as The Cave and Go! Studios are becoming increasingly frustrated with the oversized bills they receive from performing rights organizations BMI, ASCAP and SESAC. They feel that the amount of money they are required to pay in licensing fees is disproportionately high for the small amount of copyrighted music that is played in their clubs and the even smaller amount of money they make from it.
The details of music copyright law are infinitely complex, but the basic underlying principle is understandable enough: Songwriters deserve their fair share of any profit that results from the public use of their songs. In order for a songwriter to collect such royalties, he must first become affiliated with a performing rights organization. BMI (Broadcast Music Inc.), ASCAP (The American Society of Composers, Authors and Publishers), and SESAC (The Society of European Stage Authors and Composers) are the three with offices in the United States. The performing rights organizations, which, with the exception of SESAC, are nonprofits, collect fees from users of copyrighted music such as restaurants, bars and dance clubs, pay their administrative costs and channel the remaining cash to their affiliated songwriters.
According to ASCAP's Web site (www.ascap.com), "ASCAP's licensees recognize that using music benefits their businesses because music, like other amenities or products, pays off in heightened customer satisfaction, increased profits, and improved employee morale and productivity." For this reason, the right to use music as part of one's business comes at a price.
For a fixed annual fee, business owners can purchase a so-called blanket license from a performing rights organization, or PRO, that gives them the right to use any music owned by composers affiliated with that PRO. To arrive at that dollar amount, the owner fills out a fee calculation sheet that approximates how much BMI, ASCAP or SESAC music is being used. This sheet contains boxes to be checked for how many nights a week live music is provided; whether DJs, CDs, tapes, records, or karaoke machines are used; whether admission is charged; whether there is dancing permitted at any time; and so on. Beside each box is a different per occupant/per year rate, and these rates are added up and multiplied by the official occupancy limit of the establishment.
BMI's fee calculation sheet for Kings requires that they pay $9.15 a year for each of the 198 people who can fit inside, or $1,811.75. Barwick, Popson, and Siler have no choice but to abide by this system, regardless of how accurately it reflects the nature of their business.
The justification for operating this way, according to the PROs, is that it would be just as impossible for a songwriter to monitor the usage of all his compositions as it would be for a club owner to negotiate with the owner of each individual song played in that club. Performing rights organizations and blanket licenses exist to eliminate that kind of hassle. "Our job," says Jerry Bailey, director of media relations for BMI, "is to make it as easy as possible to use the music of BMI songwriters while at the same time protecting the legal rights of those songwriters." That logic is hard to argue with, but when licensing fees are too big for small clubs to handle, no good is served.
Of the current situation at Kings, Barwick says, "In one way, I feel like people would think you should quit whining and suck it up and consider this a cost of doing business. But on the other hand it's like, 'Yeah, but what are we getting out of this?' It's not helping the people that play here. It's not helping us." That's because, as he explains, "the people that play Kings are for the most part not affiliated with BMI or ASCAP. They are mostly local bands looking for a place to play so they can try to get established." With the exception of a few '80s nights, the three nights a year of "Great Cover Up" shows and the odd cover song a band plays, whatever money Kings is lucky enough to make is usually not a result of the use of copyrighted material.
The smaller live music venues of the Triangle--Kings, Local 506, Go! Studios, The Cave--do not exist for the purpose of making money for their owners or the bands that play there. "I'm in this business to keep The Cave a part of the community," says Mouse, who, along with Dave Sorrell, took over ownership of the legendary Chapel Hill tavern in April 2000. "It's been a community bar since 1968, and when I worked down here it brought me so many benefits outside of making money. ... I'm not a musician myself, and so just the opportunity to be around those creative folks made me happy."
Mouse says his annual music licensing bills run to almost $2,000, an amount that would likely put him out of business were he forced to pay it tomorrow. With the slow economy, neither he nor Sorrell have been able to pay themselves yet this year. "I would actually love to pay all three companies [BMI, ASCAP, SESAC] if they gave me a reasonable rate where I could afford it," he explains. "And I would definitely pay them if I made money off of the music."
But at present, small club owners in the Triangle don't have much of a choice. Many of them are paying the PROs what they can when they can and hoping the lawsuits don't come. Jerry Bailey is aware that some business owners become annoyed when BMI contacts them about paying licensing fees. But, he says, "we can't negotiate a discount fee because we are required by law to treat all businesses of the same class and category in a similar fashion." Sensing that some people might be happier if they could avoid dealing with PROs altogether, Bailey says, "If we went away tomorrow, then you'd have to deal with every songwriter individually."
And he's right. But the flip side of that coin is the fact that if a club like Kings or The Cave paid their licensing bills in full, they would go away tomorrow. And that is in no one's interest. Bands have to get started somewhere (real bands, that is, not boy bands), and you never know where the next chart-topper might be lurking--the kind of band that can really generate some revenue for record labels, for concert promoters, for themselves, or for their performing rights organization.
As Jerry Bailey says, "Our job [at BMI] is to bring songwriters and business owners together." The owners of Kings happen to be both--Barwick used to play in Ashley Stove, Steve Popson was in Polvo; and Paul Siler is a member of The Cherry Valence. They find it difficult, however, to reconcile the one or two digit royalty checks they receive every once in a while with the four digits they owe in licensing fees each year. And most bands who play at Kings would consider it the ultimate success to become as famous as Polvo.
The growing sentiment among the owners of small clubs in the area is that they are being made to shoulder too large a piece of the royalty pie. The money the PROs demand of them, they feel, is not making its way back to the bands and artists who play their clubs. The way Ben Barwick sees it, the problem with current royalty distribution system is that it is "hitting the wrong guy."
If small club owners like him continue to perceive that the PROs are serving the interests of only the richest and most established artists, they will continue to question the fairness of the system. Songwriters and business owners not only need to be brought together; they need to be brought together in a just and equitable manner. BMI, ASCAP, and SESAC are in the perfect position to do that. It's their job. But until they begin making steps toward that goal, the collection notices and frustrations will only pile up.