Restaurant Music Licensing Fees Enforced More Consistently By BMI, ASCAP

How Restaurants Can Go Broke By Playing Music

There's a lot of overlap between restaurant lovers and music lovers, so it's not hard to imagine that, if you open a restaurant, you have a favorite band. But before you plug your iPod into the new speaker system in your Mexican-Ghanaian-Tamil fusion joint in Albuquerque, hoping to blast your favorite mashup of Taylor Swift and Ghostface Killah, there's something you need to do: buy the rights.

That's because, according to TJ Jacobberger at Inside Scoop SF, music rights managers BMI and ASCAP have grown increasingly vigilant about enforcing their licensing agreements with restaurants over the past several years. Apparently, the two companies, which each distribute the rights to millions of songs on behalf of artists, have sued more than two dozen restaurants for copyright infringement. These violations can be costly. One contentious case from a couple years ago involved Seattle restaurant Ibiza, which had not paid to use ASCAP's music. The rights managers asked the restaurant to pay a fee of $30,000 as remuneration.

Even if any little restaurant is unlikely to be caught by BMI and ASCAP's anonymous inspectors, the steepness of the fees makes paying for the rights to use music seem like a relatively easy decision. Rights aren't even that expensive. BMI's website quotes a fee of $2.45 per restaurant occupant per year of iPod or CD usage, meaning that even a huge, 200-seat restaurant would only end up paying about $500 per year. Fees do go up significantly, though, if restaurants want to play live music covers, allow dancing or set up a karaoke bar, even for occasional use. (ASCAP does not post rates on its website.)

And the National Restaurant Association has put together an easily comprehensible primer on the subject for would-be restaurant DJs. BMI calls itself a non-profit organization, and says that 87% of its fees are passed on to musical artists.

The other option is to hire a background music company like Muzak, which takes care of licensing itself. But that's expensive, and offers less individuation than your own iPod. You can also avoid fees if you install a paid jukebox from a licensed operator. But then you run the risk of have music-free periods if customers don't want to pay for music.

So, to that budding, Taylor Swift-loving restaurateur, we say, play on -- after you take care of a little paperwork.


An earlier version of this story imprecisely depicted the nature of BMI and ASCAP's business models. They are music rights managers, not owners, and their fees vary considerably depending on the nature of a venue's musical performance.

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