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On hold? The music may be illegal
Many businesses need a license for broadcasts
The copyright war waged by Napster and
other online music vendors on Capitol Hill and in corporate boardrooms
has grabbed the lion's share of media attention, but there's another
story behind the music that affects health clubs, bars, clothing shops,
bookstores and other businesses.
When companies
play radio stations for calling customers put on hold, they are
required by law to get approval from the nation's leading
performance-rights groups.
Dr. John Riehm, an allergist with Kentuckiana Allergy
PSC, learned of the requirement about a year ago through son-in-law and
songwriter Keith McGuffey. Riehm said he had used on-hold radio
broadcasts for most of the practice's 30 years.
"We were surprised. We acted on it immediately," said
Janet Wimsatt, office manager at Kentuckiana Allergy.
The bulk of music recorded in the United States falls
under the auspices of two nonprofit performing-rights organizations,
which represent writers and composers.
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For more information
ASCAP and BMI are the nation's largest performing rights organizations.
Information about licensing requirements for businesses is on their Web
sites.
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The American Society of Composers, Authors and
Publishers (ASCAP) is the licensing agency for more than
150,000 members in the United States and is responsible for collecting
royalties on 8 million musical works. Another organization, Broadcast
Music Inc. (BMI), represents more than 300,000 members and 4.5
million works.
"Most businesses that use music are licensed," said
Jerry Bailey, BMI's director of media relations. "There is a
substantial percentage which is not, but it's a minority percentage.
And we're not satisfied by that, and we're working very hard to
increase compliance."
Bailey said licensing arrangements take into account the
size of a business, the method of playing music and the importance of
music to the business.
For example, stores of less than 2,000 square feet
don't need a license. Neither do restaurants and bars with less than
3,700 square feet. Those that play CDs also are exempt if they use
fewer than six speakers and have no more than four in one room.
But the standards are tighter for radio transmissions
broadcast over phone lines.
"If they're putting it in their phones, then they
would need a license agreement from BMI," Bailey said.
ASCAP and BMI base their licensing fees for
music-on-hold service on how many phone lines the business has.
Businesses with fewer telephone lines pay less than large companies.
Because Riehm's office has about 40 lines, it would
have paid $388 to ASCAP and $494 to BMI each year.
For some companies, the fees could be thousands of
dollars a year.
Riehm avoided the cost by having McGuffey record some
original songs to replace the radio music. The effort blossomed into
Message Pro, a company owned by McGuffey and his wife, Julie. Message
Pro creates music and messages for businesses for a flat $500 fee.
Businesses that don't comply with the licensing laws
risk hefty fines.
The Better Business Bureau
warns its members that fines for copyright infringement can be as high
as $30,000 for each song performed without a license.
Carrie Lincks, spokeswoman for the Better Business
Bureau in Louisville, said, "If you're not going to license it, you'll
obviously risk the negatives of the law and you could be fined quite
steeply."
ASCAP notifies companies through letters and phone calls
that explain the benefits of using licensed music in their businesses,
business manager Laura Hughes said.
BMI uses the same approach, taking stronger action only
when other efforts have failed, Bailey said. The company will send
independent contractors — typically disc jockeys or band members — into
a store to determine whether the music being played is protected by
BMI.
"We don't threaten anyone," he said. "But at some
point you do have to say to them, `Look, this is copyright law and this
could end up in court.'
Bailey estimates that 150 to 250 lawsuits are filed
each year, but most are settled before they go to trial. ASCAP reports
similar numbers, according to Hughes.
"We're not the enforcer," Bailey said. "We do defend the rights of
songwriters. We do file suits on behalf of songwriters."
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