You don’t run a nightclub. There’s no DJ in the office. You don’t host concerts, raves, or even church services. You own or manage residential buildings—apartments. So why is someone from the American Society of Composers, Authors and Publishers (ASCAP) claiming you need to pay for a music license?
Why Do I Need to Care?
Under U.S. copyright law, songwriters own the exclusive right to the public performance of their songs. In addition to live performances, this law covers the playing of recorded music:
• In restaurants, coffee shops, nightclubs, bars, stadiums, retail stores, schools, and even churches.
Under this law, every time a song is played in public, the copyright owner of the song has to have authorized the performance and is entitled to payment for the performance.
Because violations of this law can run companies tens of thousands of dollars, it’s critical to your properties that you understand the risks and how to avoid them.
Performing Rights Organizations (PROs)
It would be impossible for a songwriter to track down and grant authorization every time his or her copyrighted song was played, so in 1914 a group of songwriters banded together to form a performing rights organization (PRO). This organization would authorize public performances of songs and collect license fees for such performances.
That’s how ASCAP was born. Today, there are two other PROs in the United States: BMI (Broadcast Music Inc.) and SESAC (they now disavow that it’s an acronym that stands for Society of European Stage Authors and Composers).
Songwriters enter into agreements with music publishers and affiliate with PROs to collect performance royalties. On behalf of their members, PROs issue public performance licenses to places where music is performed and collect the license fees.
To comply with this law, those who play recorded music in their venues must enter into a blanket license with each PRO. This license then permits the venue to play any song in the PRO catalog in their place of business.
I don’t use music as part of my business. Why are PROs targeting me?
In addition to seeking out the obvious users of music, PROs spend considerable time and resources finding businesses whose music use is secondary or even incidental to the business, but not accidental or intentional.
PROs target businesses that use music in a variety of ways:
• At birthday and holiday celebrations in the office.
In your residential buildings, there may also be music on the televisions in the tenant common rooms or in the fitness center, perhaps piped in from radios or sound systems.
Why does my business have to pay?
If your building uses music to enhance tenants’ or potential tenants’ perception of the building, you are subject to this law. When music is provided, made available, or performed to attract tenants or create a specific ambience, atmosphere, or presentation—even in areas reserved for residents—it’s time to assess your risks.
We received an infringement letter from a PRO. What if we refuse to pay?
PROs are persistent and convinced they can find unauthorized uses of music somewhere in your company. Based on that confidence, once you're targeted, they'll eventually file a copyright infringement case against you.
Copyright infringement is seen as black and white: There's infringement or there isn’t. Neither lack of intent nor lack of knowledge will excuse infringing use, although it might mitigate damages.
In this age of social media and online postings that never disappear, it’s not difficult for a PRO to find evidence of the unauthorized use of a song.
That’s all it takes.
One song played without permission is infringement. While the damages for the infringement of one song might be minimal (perhaps under $1,000), if there's a judgment of infringement, a PRO might be awarded its attorneys fees, which could run into the tens of thousands of dollars.
As is often the case in litigation, the costs of getting to a settlement may be more than the license fee.
How do we avoid a lawsuit?
There are two ways to avoid a lawsuit: Remove all music uses in your building or take a license.
Remove All Music Uses
You can reduce the risk of being sued by conducting an audit of all areas of your business that are open to the public: fitness centers, reception/office, common and party rooms, hallways, courtyards, and pools. Then, remove any device on which music can be performed. That includes televisions, radio (satellite, broadcast, and cable) receivers, and music players (boom boxes, iPods, and so on) from any place open to the public.
In fitness centers, replace the TVs that can be viewed by everyone in the facility with screens that are viewed one at time: for example, a screen on a treadmill. Note that even this option may leave you open to risk because several people will use fitness equipment over the course of a day or a week. So PROs might deem public the performance of music on these televisions.
The Safer Bet: Take a License
The only sure way to avoid being sued is to take a license.
The good news is that PROs are happy to deal and will negotiate the license fee.
For residential buildings, PROs calculate fees based on the number of units per building. Often, the number of buildings—and, therefore, the number of units owned—changes several times a year as properties are acquired and buildings sold. The PRO will essentially take a snapshot of the properties owned as of the effective date of the license, usually Jan. 1. In the last quarter of the license year, the PRO will ask for an update to add properties acquired during the year and remove properties sold.
Triple the Headaches
Finally, remember there are three PROs in the United States. While there is no formal association between the three (that would likely violate antitrust laws), they're in the same business and are generally aware of what each other is doing. If you secure a license, this stays between you and the PRO. But a public event like a lawsuit by one PRO will inform the other PROs that there is an unlicensed business. Negotiated licenses can protect your business reputation.
Music is used to create atmosphere and ambience attractive to your tenants; consider the cost of licensing music for the public areas of your communities a cost of doing business.