Music venues find it costly to stay on the right side of copyright law 

click to enlarge Lauren Reece, Axe and the Oak marketing director, with a guitar signed by musicians who have performed onstage at the venue. - ERINN CALLAHAN
  • Erinn Callahan
  • Lauren Reece, Axe and the Oak marketing director, with a guitar signed by musicians who have performed onstage at the venue.

Live music is every bit as vital to Axe and the Oak Whiskey House’s business model as its signature malted liquor.

Mondays and Tuesdays are for acoustic music, with a house DJ on Wednesdays, says Lauren Reece, Axe and the Oak’s marketing director. Thursday through Saturday is when the more established bands, many of them based in Manitou Springs, take the small stage tucked away in a cozy corner of the former Ivywild School.

“People know that we’re a place that always has live music,” Reece says. “Especially on the weekends, they really like coming down and having a place to get a drink, but not necessarily to be as crazy as at some of the downtown bars.”

About two years ago, however, Jason Jackson, one of Axe and the Oak’s founding members, received some unwelcome feedback: a letter from a performing rights organization threatening to hit him with a lawsuit for hosting live music without legal permission — unless he paid that organization an annual licensing fee.

“I bet if you were to call any bar in the Springs, you would get the same response,” Jackson says.
These organizations — which include Broadcast Music Inc.; the American Society of Composers, Authors and Publishers; Society of European Stage Authors and Composers; and Global Music Rights — act as intermediaries between music venues and songwriters to protect intellectual property and make licensing more cost-effective and convenient, according to an article posted in November 2017 on the National Restaurant Association’s website.

Restaurants and bars pay a fee to the PROs for a blanket license that grants permission to use all of the music each organization represents, the article states. Those organizations, in turn, distribute the fees to their affiliated songwriters, publishers and composers as royalties.

Jackson eventually paid the fees, but he couldn’t help thinking that the scales were tipped, and not in favor of business owners.

“I fought it [for] forever,” Jackson says. “I was so upset.”

Music copyright law is “not exactly simple,” says Dave Ratner, principal of Creative Law Network, a Denver-based firm specializing in entertainment, intellectual property and business law.

“There’s two copyrights in every piece of music — composition, and completely separate for sound recording. The only thing that the PROs are licensing is the right to publicly perform the composition,” says Ratner, who also teaches classes on entertainment and intellectual property law at the University of Denver’s Sturm College of Law. “That doesn’t just mean a live performance. That means performing for more than a few people in a venue that isn’t at your house.”

When it comes to publicly performing another artist’s copyrighted composition, the licensing responsibility generally falls to the venue, not the performer, Ratner says.

“Whether it’s a little dive bar or a football stadium, they all need to have a license,” Ratner says. “The fee will vary, but the fact that you need a license does not.”

A PRO will issue a blanket license granting a venue the right to perform every single song in that organization’s catalogue, Ratner says. Licensing fees vary based on the size of the venue, but are often based on a building’s seating capacity established by a fire marshal, he says.

ASCAP’s rates for restaurants, nightclubs, bars and similar establishments depend on “whether the music is live or recorded, whether it’s audio only or audio-visual, the number of nights per week music is offered, whether admission is charged, and several other factors,” according to the organization’s website.

BMI’s website states that “all fees, less BMI’s operating expenses, are paid to our affiliated songwriters, composers, and music publishers in the form of royalties. Currently, nearly 90 cents of every dollar of your licensing fee goes to our affiliated copyright owners.”
One thing that often gets lost is that “ultimately the PROs are collecting money on behalf of the artist,” Ratner says.

“If you think about when player pianos came out, when I wrote a song, the only way that song was going to be performed was if I performed it. I can control the exploitation of my performance,” Ratner says. “As soon as we had radios, all of a sudden, my song is all over the place and it’s really not feasible for me to go to every bar and restaurant and collect a licensing fee.”

A performing artist can only grant licensing ability to one PRO, but business owners typically can not get away with only getting a license for one PRO, Ratner says. All PROs have searchable databases on their respective websites, but all also include disclaimers stating the information may not be accurate and will not protect a business owner from claims of infringement, according to the National Restaurant Association.

“If I own a song and I’m with BMI, not ASCAP, and you have an ASCAP license and someone plays a song of mine in your venue, I didn’t get paid,” Ratner says. “You didn’t have the right to use my music.”

If that happens, the consequences can be sobering, with fines of up to $35,000 per work infringed, according to a June 2018 report published by SevenFifty Daily, an online publication that covers the business and culture of the beverage alcohol industry.

In Colorado, establishments can face a minimum $2,000 fine for violating the statutes covering performing rights societies, according to legislation passed in 2017.

Each PRO does its own enforcement, with designated teams that look for and find places that allow live performances of copyrighted music without the appropriate licenses, Ratner says.
While Ratner often encounters potential clients who were unaware such a service existed, “ignorance is not a defense,” he says.

click to enlarge Venues offering music have been sued for using songs without permission. - ERINN CALLAHAN
  • Erinn Callahan
  • Venues offering music have been sued for using songs without permission.

Jackson, a musician
himself, says he is frequently told not to perform covers by venues that have not yet paid PRO licensing fees — something that he says can have a chilling effect on aspiring musicians looking for a foot in the door with the local scene.

“That’s not a problem for me, but for up-and-coming guys that haven’t started writing yet and just want to perform, these businesses are paying the price,” Jackson says. “[The PROs] got around the individuality and went after the businesses, and so far they’ve been doing pretty well.”

A statute passed by Colorado lawmakers in 2017 brought some relief to the state’s small music venue owners, Jackson says. A performing rights society is now required to publish and file with the secretary of state: its form contracts, a schedule of fees it charges a proprietor to license music for public performance, a proprietor’s rights and duties for public performances, and a catalog of musical work the society licenses.

Still, Jackson says, monitoring each performance’s compliance involves time and resources not available to many small business owners.

“[The PROs] say, ‘You need to just pay the fee because you might have people in your establishment that are going to play one of our covers,’” Jackson says. “I can’t police that as a business owner. I may not even be there, and my bartenders are serving drinks.”

Jackson added that he has heard of businesses closing their doors because “the lawsuits are for more than the businesses even have,” he says. He adds that he would rather see his money go directly to the artist instead of licensing fees to PROs representing thousands of musicians.

“As a small business owner, $5,000 or $6,000 a year is a lot of money,” Jackson says. “That could go to supplies. That’s artists I could be paying for their time to come in and share their souls with me.

“There’s a lot I could do with that money, and it goes nowhere.”

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