MUSIC LICENSING AND THE MEETING PLANNER
©1992 Corbin Ball Associates

I. INTRODUCTION:

What is music licensing and why is it suddenly an issue? What are the costs (for compliance) and liabilities (for non- compliance)?

What are the options?

Definition: Music licensing

The permitting of others to use one's music for a fee.

It is the granting of the right to publicly perform copyright music from the owner to another. In return, the recipient of the right -- the licensee-- pays the owner a royalty fee.

Copyright Law

Copyright law requires that the producer or sponsor of a public performance of copyrighted musical works -- live or recorded-- must obtain permission (usually by licensing) from the copyright owner.

If you do not get this permission then you are subject to criminal penalties under the provisions of the U.S. Copyright Law.

II. HISTORY/OVERVIEW:

1789:

Article I of the U.S. Constitution -- the basis of today's copyright laws. It addressed a major concern of to protect the interest of those who, through their creativity, were able to constructively contribute to society.

1906:

The Copyright Law (revisions in 1909) Music is considered a property which the

composer owned. Authors and composers of music were given specific rights to collect royalties for use of their music. These royalties were limited to public performances which were for-profit.

1914:

The American Society of Composers, Authors and Publishers (ASCAP) was formed by Irving Berlin and as a performers' rights organization. It was impractical for users to individually license each song that was published.

ASCAP was, however, a discriminatory, elitistorganization and had little to do with musical works that were considered to be folk, county, and, later, rock & roll, cajun, and several others.

1939:

Broadcast Music Incorporated (BMI) was created to fill this gap for a growing record and radio industry when a group of about 600 broadcasters boycotted ASCAP music.

1976:

First real revision in law since 1909. It eliminated the "for profit" condition (broadening the cope to include most meetings and conventions even if run by not-for- profit organizations) applied a much broader definition to the words "perform publicly" (a public performance was deemed to be almost any performance held by gathering of people other than friends and family).

1980's:

The meetings industry grew tremendously in size and revenues.

Also, during the '80 music reproduction technology improved greatly. Consumer electronics advances transformed music into an indispensable sales and marketing tool at conventions and trade shows.

1986-89: ASCAP and BMI saw this growth of the meeting industry as a potential revenue source and began seeking license agreements with exposition managers.

1989:

ASCAP began negotiations with NAEM limited to music licensing fees for exhibitions.

This move was precipitated by the expiration and subsequent renewal of the music licensing endorsement by the American Hotel and Motel Association (AHMA). In the past, hotels and other meeting sites paid licensing fees for music played anywhere on their premises. As

the changes in the 1976 law considerably expanded the scope of what could be licensed, the AHMA and others argued that it did not make economic sense for the site to pay licensing fees if the site is not the sponsor of the trade show or meeting. The AHMA took the position that they should not have to pay the licensing fees for music used by their clients and not them.

1989-90

ASCAP and BMI began strongly worded blanket mailings to ASAE and BMI members with ontracts threatening severe penalties for use of unlicensed copyrighted music. This was the first that many meeting planners heard of the issue.

March,90 Music task force (consortium of ASAE, MPI, PCMA and RCMA) started negotiations with ASCAP and BMI.

III. DEFINITIONS:

Copyright Law

Copyright law requires that the producer or sponsor of a public performance of copyrighted musical works -- live or recorded-- obtain permission (usually by licensing through a licensing organization) from the copyright owner.

Producer or Sponsor

The sponsor is the association, company, producer or person who causes the music to be performed.

It is NOT the hotel, convention center, band, independent planner, or the exhibitors -- it rests with the overall sponsors f the event (the "end users" according to the copyright law).

Public performance

"Public performance" according to the copyright law, is a performance held outside a normal circle of family and friends. This includes: conventions, expositions, industrial show, meetings, trade shows, satellite teleconferences and similar events.

Even private clubs are included -- almost any meeting where more than just family and friend are gathered.

Fermata International Melodies, Inc. vs. Champions Golf Club, Inc.is an interesting example. This case involved a Houston golf club which, one night in 1986, played certain songs on a stereo phonograph using external speakers into the club's dining room; just 21 club members and their guests were present. ASCAP members brought suit for copyright infringement. The ASCAP members prevailed and the court awarded $8,000 as well as costs and attorney's fees.

Musical Works

Includes all forms of music, live or recorded via tape, broadcasts, records, CD, and music in video and audio presentations

Music licensing

The permitting of others to use one's music for a fee.

Music licensing is the granting by the owner of the right to publicly perform copyright music to another, thus permitting the recipient to perform he music in public. In return, the recipient

of the right -- the licensee-- pays the owner a royalty fee.

As it was and is impractical for composers to license individual users of their music, composers, lyricists and music publishers banded together to form an association.

By signing a music licensing agreement, a planner obtains the rights to all works in that society's repertoire.

Licensing Organization

Organizations permitted by U.S. copyright law to collect license fees for music performances.

ASCAP and BMI today boast repertoires of 3.5-4 millions songs (95% performed music) and collect over 95% of all the American performing rights royalties. They both are non-profit voluntary associations that actively and aggressively compete with each other for members. These music licensing societies are authorized to collect fees on the behalf of their songwriter members.

They are also very aggressive in the copyright policing/monitoring activity and copyright enforcement procedures. They have been collecting licensing fees for years from bars, hotels, restaurants, jukeboxes, elevators, amusement park, and most all other profit making agencies that use music. They are "deep pocket" organizations with annual combined revenues of three-quarters of a billion dollars and are well prepared to flex their legal muscles.

There are other licensing organizations (eg. SESAC -- the Society of European State Authors and Composers) who collect fees in a different manner and have elected at this time not to pursue

meeting planners for income.

Penalties:

Copyright law violations carry severe penalties, including damages of not less than $500 nor more than $100,000 per song as well as court costs and attorney's fees.

How enforced?

BMI has sent letters and licensing agreements to 20,000 meeting and convention organizers (ASCAP to 30,000 planners). They monitor compliance through a network of meeting industry contacts. (ASCAP for example, maintains a national field staff of 200 to monitor compliance -- the Music Police! (typically music instructors that go to events in their community, write down songs, and turn the song lists in.

How prevalent?

I have dealt with musicians and booking agents in Los Angeles, San Diego, Orlando, Boston, and New York during the past three years. Not one of them had heard of the new enforcement of

licensing agreements by ASCAP and BMI or of the music police.

Cases are, however hitting the news. (Homebuilders of Greater Toledo, Feb.'90 and Marin Home Show (Feb.'91) are examples. Both were settled out of court but BMI and ASCAP is promising

increasing enforcement.

IV. EXEMPTIONS:

There are exemptions in the copyright law which allow the playing of music without the payment of royalties:

1. A gathering of family and friends (does not constitute a performance)

2. Public domain music

Music licensed before 1978:

Music that is 75 years old that has not been revised and copyrighted. (Most music written before 1917) After 1978: protection expires 50 years after the death of the last surviving author or composer

2. Education: face-to-face teaching activities of a nonprofit educational institution.

3. Religion: Religious music played during the course of services at a place of worship. (However, religious music played at a banquet at which a prayer is said before the

meal is not exempt.)

4. Non-profit: Music is exempt when it is performed without any direct or indirect commercial advantage and without payment of any fee or other compensation to any of the performers, promoters, or organizers, and usually where no admission is charged. If admission is charged, the proceeds, less the reasonable costs of producing the performances, are exclusively for educational, religious, or charitable purposes.

5. Public reception by a single receiving apparatus of a kind commonly used in private homes with no admission. A TV or radio can be played in a store, for example, if no additionally speakers are used.

6. Agricultural fairs

7. Record stores

8. Handicapped: Transmission to blind or deaf audiences of non-dramatic literary works and single transmission to blind audiences of dramatic literary works published at least ten years earlier.

The bottom line is that if copyrighted music is played at most meetings and conventions, the sponsor is liable.

 V. BMI/ASCAP MUSIC TASK FORCE AGREEMENT DETAILS:

Licenses must be obtained before the event, payment of fees is not due until after the event.

Fees from both societies are based on whether the music is live or recorded and on the number of attendees who hear the music:

RECORDED MUSIC: BMI ASCAP

1992 4.5 cents/ 4.5 cents

per attendee /per attendee

1993 4.8 cents/ Increase by rate of

per attendee Consumer Price Index

DAILY LIVE MUSIC FEE

BMI ASCAP

Number of Attendees* Number of Attendees*

Up to 150 $25 250 or less $25

151-200 $30 251-500 $50

251-400 $45 501-750 $75

401-800 $90 751-1000 $100

801-1500 $140 1001-1500 $125

1501-2500 $195 15001-2000 $150

2501-3500 $250 2001-3000 $200

3501-4500 $300 3001-4000 $250

4501-6000 $360 4001-5000 $300

6001-8000 $415 5001-7500 $350

8001-10,000 $470 7501-10,000 $400

10,001+ $560 10,000 or more $500

(approx. 5.6-20 /attendee) (approx. 5-10 /attendee)

*Attendees: those who have registered and paid to be at the event -- not including producers, employees, administrative service contractors, press, temporary personnel and 50% of exhibitors).

The licensing fee allows the user to play all songs in the repertoire of the licensing organization.

Both organizations calculate attendance as the sum of the number of persons at each functions with live music during the day.

ASCAP has a minimum fee of $50/event; BMI's is $150/year. If fees for that meeting don't total $150, the balance is credited to future meetings held that year. ASCAP's max. is $4,000/event,

BMI's max. is $4,500 per event.

For example: this group of 200 would not exceed the minimum fee for either society -- so it would cost WSAE $200 total to license this single event -- $50 ASCAP + $150 BMI.

If WSAE had met the minimum fees, it would cost $18 dollars (4.5 x 200 attendees x 2 (ASCAP & BMI)) for recorded music and $55 for live music ($30 to BMI and $25 to ASCAP).

If we had live music this afternoon and this evening from a different set of musicians for the same people, it still would remain $55 dollars -- it is computed on a daily rate.

VI. OBJECTIONS:

People don't like to pay for this they are used to getting for free.

The hassle -- separate quarterly agreements, billings, etc.

Poor public relations approach by BMI and ASCAP.

Aggressive telemarketing.

Their offer to grant "amnesty" for groups that signed up implied criminal intent.

Disagreements with the statements of the Copyright Law:

Many feel that harassment of non-profit societies has gone beyond the intent of Congress to achieve their goals. If music is played on exhibit floor, should costs be passed on to the exhibitor. It is unfair to attempt to make show managers responsible for the acts of their exhibitors. Oppose provisions for auditing records to verify attendance -- show managers don't want outsiders messing in their books.

The definition of "public performances" is thought to be to broad. As the musician often selects the individual pieces and is more knowledgeable as to their origin, perhaps clauses could

be written to shift the responsibility to them

Disagreement with the internal workings of these societies: Royalty payments are distributed by radio air time. Unfair if you play Sinatra.

Anger expressed at MPI and ASAE for giving out the mailing lists.

VII. ALTERNATIVES:

Turn to music libraries that have obtained their own licenses from ASCAP/BMI or that create original work. ( ie. Cantata Sound System by 3M Sound Products

Deal with music libraries who offer original musical compositions to which they hold the copyright.

Others negotiate directly with a music publisher for the rights to certain music.

Music Buffet: permit a planner to play any music he chose for a flat fee. Under a music clearinghouse arrangement, the planner or show manager would be removed from the music licensing loop entirely. Exhibitor would arrange for music licensing directly in the same way the would arrange electricity.

Deal directly and license directly with the composer

Use public domain music (that written before 1917 and not done in a new revised and copyrighted version.) classical piano, guitar, flute, harp traditional ethnic folk music (Italian, Chilean, Mexican) older Dixieland (traditional) Jazz

Deal with groups that play original music.

Use no music.

Write protective clauses in exhibit clauses, placing responsibility for their use of Licensed music on them, and ENFORCE it.

Proposed Sample Hold Harmless Agreement from NAEM:

Each exhibitor is responsible for obtaining all necessary licenses and permits to use music, photographs or other copyrighted material in exhibitors' booths or displays. No exhibitor will be permitted to play, broadcast or have performed any music or use any other copyrighted material, such as photographs or other artistic works, without first presenting to the (your organization's name) proof satisfactory that the exhibitor ha, or does not need, a license to use such music or

copyrighted material . The (your organizations name) reserves the right to remover from the exhibit hall all or any part of any booth or display which incorporates music, photographs or other copyrighted material for which the exhibitor fails to produce proof that the exhibitor holds all required licenses. The exhibitor shall remain liable for an shall indemnify and hold the

(your organization's name), their agents and employees, harmless from all loss, cost, claims , causes of actions, suits, damages, liability, expenses and costs, including reasonable attorney's

fees, arising from or out of any violations or infringement (or claimed violation or infringement) by exhibitor, exhibitor's agents or employees of any patent, copyright or trade secret rights or privileges.