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Licensing to Kill

Are Performance Rights Organizations Like ASCAP Threatening The Venues That Foster Young Musicians (and Future ASCAP Members)?

Illustrations By Smell Of Steve Inc.

By Michael Byrne | Posted 3/26/2008

It was a free show.

Last October, Load of Fun, a gallery space on North Avenue at the upper boundary of the Station North Arts and Entertainment District, advertised a gratis concert on its web site. Actually, it wasn't really a concert; it was more of a performance-art piece by Lee Connah involving "old recycled objects" and the playing of vintage vinyl records. Load of Fun, which operates as a nonprofit via the Station North Arts District and is not itself a technical nonprofit, stood to make no money off the night, one of only one or two the space hosts each month that involves live or DJ'ed music. Like everything that happens at Load of Fun, it was an incubator event, something intended to foster emerging artists. The gallery is "where [they] can actually establish an audience," says Sherwin Mark, its cordial, South African-accented gentleman owner.

A month after the event, Load of Fun received an e-mail from a representative of the American Society of Composers, Artists, and Publishers (ASCAP), one of three main organizations that administer music copyrights. The e-mail stated that the records played during the October event, or at least one of them--none was specifically mentioned in the e-mail--were covered by ASCAP's labyrinthine music licensing system. Load of Fun didn't hold an ASCAP license and was therefore, ASCAP's e-mail alleged, violating U.S. copyright law.

Suzanna Gerber, Load of Fun's events and exhibitions coordinator, recalls dealing with ASCAP representative John Saracino. "My initial reaction [was]: It's like the federal government is the Mafia--Put my cigarette machine in your restaurant or we'll break your knee caps," she writes in an e-mail to City Paper. "He emphatically described the organization, ASCAP, as a part of the federal government, not [a private organization] capitalizing on copyright legislation."

"It felt like a scam from the get-go," Gerber adds by phone.

There were roughly 15 people at the show, according to Mark. Not only wasn't the space charging admission, but it doesn't sell alcohol, often the primary source of revenue for a music venue. The space wasn't selling anything that night, in fact. Regardless, the event was technically what copyright law deems a "small performance" of someone else's creation. And that someone else wasn't getting his or her due from the elaborate and opaque ASCAP royalty payment system.

As is usually the case, ASCAP demanded that Load of Fun purchase an annual ASCAP license. Based on the size of the room and a host of other calculations--figuring in everything from form of music (recorded, live, etc.) to ticket revenues, but mainly audience capacity--ASCAP calculated Load of Fun's license would cost roughly $1,000 a year, slightly below average for a small- to mid-sized room. For Load of Fun, which operates on a shoestring--Mark estimates he loses a couple of thousand dollars a month already--$1,000 was too much, enough to end music performances at the space permanently.

Under copyright law, Load of Fun could have been hit with a lawsuit ranging anywhere from $750 to over six figures per copyrighted song played that night, based on whatever the "court considers just," according to copyright law, and whether or not it was a willful act.

When ASCAP asks for money, it doesn't do so casually. Last year, Mount Vernon's Red Maple was one of 26 nightspots across the country hit by ASCAP-instigated lawsuits--everything from a Holiday Inn in suburban Detroit to a den of glitz in Manhattan. Taken together, the lawsuits constituted a bombardment that reeked of "shock and awe," a well-coordinated, high-profile attempt to make examples for nonlicense holders.

Red Maple's situation is quite a bit different than Load of Fun's. Music is a priority at the club, which hosts DJs and music events on a regular basis. Red Maple also sells alcohol; it's in it to make money. And, most importantly, Red Maple spurned ASCAP's initial advances, repeatedly refusing to purchase a license.

Red Maple's owners instead claimed that the club specializes in "world music"--flamenco, reggaeton, salsa, and so forth--that wouldn't likely be registered with ASCAP. "As we are aware of ASCAP's criteria for collecting fees from establishments such as ours we go out of our way to ensure that we only play music which does not fall under their licensing," co-owner Leonard Clark told The Sun last summer. Thus, Red Maple's argument went, it had no need to have a small performance license from ASCAP.

While it may be true that Red Maple is more outside the mainstream than many clubs, the trouble is that it's difficult to completely control what's being played in your club, short of demanding complete set lists from DJs and bands beforehand. Furthermore, DJs and bands aren't held liable for copyright infringement. The band or DJ is a temporary employee of the club, and thus, the club is responsible for their actions.

So, ASCAP sent a spy into Red Maple on Friday, May 25, 2007, and came away with a list of six specific infringements, ranging from Madonna to Baltimore's own the Basement Boys. On July 30, eight music publishers (some of the songs cited involved multiple publishers) filed a joint lawsuit against Clark and co-owner Gyeong Cho for copyright infringement resulting in "great injury to the Plaintiffs." Each "great injury" was worth a maximum of $30,000, according to the suit, which also demanded that Red Maple cease playing licensed music (read: get an ASCAP license in order to continue doing so) or the "Plaintiffs will suffer irreparable injury."

The case was resolved early last month with a confidential settlement. Neither Red Maple's owners nor ASCAP will comment on the suit, but Red Maple is still in business and, according to Vincent Candilora, ASCAP's senior vice president of licensing, the club is now operating with a license and "we are happy with the settlement."

Both Load of Fun and Red Maple's respective situations--and many like them around the country--tend to look pretty bad to the music-consuming masses: like the clubs are getting a bum deal or, worse, are victims of some sort of government-supported Mafia-like extortion ring. Who is ASCAP, after all, to be the proxy administrator of copyright law? But ASCAP, and other performance rights organizations (PROs) like it, is a democratic-by-charter organization governed by a board of elected musicians whose purpose is ostensibly to protect the rights of artists (alive or dead), according to its literature.

There probably aren't a whole lot of musicians around town that would argue ASCAP was acting in their favor by potentially shutting down clubs. Musicians don't benefit if their "rights organizations" maintains a culture of fear among the venues they depend on. ASCAP and the other PROs have a product--blanket copyright licenses--but as some venue owners attest, their "sales" practices amount to something like soft extortion. And many ASCAP members around town probably won't even see the winning end of that--a royalty check--no matter if it's one they're due.%uFFFD

Title 17 of the U.S. Code is prefaced with these simple words: "The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." Congress exercised that power, and federal copyright law was born.

The second a musical composition comes into being and is recorded either on paper as sheet music or put to tape or disc (not necessarily duplicated) it becomes copyrighted under federal law; it can't be used by someone else without permission. You, as an artist, have what's known as a "public performance right," one of six rights enumerated in copyright law. If someone wants to play a song of yours--whether that's covering it live, playing it on the radio, playing it via the radio in a bar, playing on a jukebox or house PA system, or having it spun by a DJ--you're entitled to a cut, assuming it's outside the bounds of the "fair use" provision of copyright law, which basically means your copyrighted material can be used for demonstration purposes by students, professors, critics, and so forth.

Instead of spending all your time fielding requests for use of your composition, granting individual permissions, and tracking down illicit users, you can save yourself a lot of trouble and join ASCAP or one of the other PROs. The PROs, in turn, sell blanket licenses to businesses to use your music (ASCAP's catalog includes more than 8 million titles). Theoretically, through that PRO, when someone plays your song you get your cut.

A cut of what, though? Well, in theory, someone benefited financially from "playing your song." If it was, say, thumping from the speakers at a Gap store, then it contributed to the selling of clothes. You helped create an environment more conducive for that store to make money. Same goes for a bar. Maybe you don't go to your corner bar to listen to whatever crud your bartender happens to be into that day, but music's a key part of the bar experience. You're more likely to go to the pub with a little background music than the one with the ambiance of a morgue. So, in that way alone, the bar is benefiting financially from your song.

The same holds true for karaoke. Whether or not your song sounds like it's being performed by moose having sex, it's still your composition, no matter how mangled. And someone else is benefiting. In February, Arlington, Va., club Galaxy Hut was forced to shut down its karaoke events after being approached by either ASCAP or Broadcast Media Inc. (BMI), ASCAP's chief PRO rival, for allowing karaoke performances without the appropriate blanket license.

Even a doctor's waiting room, if the room is above a certain size and the doctor likes music, could be subject to license requirements. Your song is helping that doctor to make money. (Tunes delivered via Muzak and similar companies, by the way, are precleared, and any PRO costs are bundled into their standard fee.)

More clothes, more booze, more patients--copyright law means you're entitled to a cut of the profit. Or, in Load of Fun's situation, whatever the blood-from-a-turnip equivalent is.

In 1996, even the Girl Scouts and Boy Scouts got the licensing equivalent of a tap on the shoulder. That August, ASCAP notified the organizations that their camps would have to purchase licenses, costing $10,000 yearly in total, to continue to use the songs listed in the camps' songbooks. After quickly realizing it was committing public relations suicide, the organization backed down.

In 2007, ASCAP collected a record total of $863 million in license fees, including money collected from both broadcast and small performances. (The latter was worth $109 million of the total.) Of that money, the organization paid out a record $741 million to musicians and music publishers--organizations that buy songs/song rights from musicians and administer them. ASCAP called the windfall the result of a bold "broadening and redefinition" of the "role of a performing rights organization."

This is a far cry from ASCAP's humble beginnings. In a part of lower Manhattan known as Tin Pan Alley, the music industry as we know it today was formed. Around 1910, most "pop" musicians--largely ragtime, but whatever happened to be selling best at the moment--were clustered in the area, along with an assortment of large music houses selling sheet music of popular songs. (In a sense, the piano was equivalent at the time to our iPod.)

ASCAP began in 1914 as a collective of songwriters and publishers from Tin Pan Alley, a crew of notables including such important American musical names as Irving Berlin, James Weldon Johnson, Jerome Kern, and John Philip Sousa. The goal was protecting copyrights. Instead of business x going directly to composer/publisher y to gain permission to use a composition--the general difficulty of which made copyright abuse pretty much par for the course--music publishers, the folks printing and selling sheet music, were selling artists' compositions often without permission, or buying the songs on the cheap and turning them into hits without the composer seeing any of that benefit. What ASCAP set out to do was provide one-stop shopping: Business x could go to ASCAP for a license to use anything in its catalog for a fee, which would then be dispersed to the composer/publisher.

In April 1974, ASCAP tested its new system by suing New York's Shanley's Restaurant for performing ASCAP founding member Victor Herbert's music without a license, while Herbert was eating in the restaurant. In the Supreme Court, ASCAP won handily, with Justice Oliver Wendell Holmes delivering the following statement in his decision: "If music did not pay, it would be given up. Whether it pays or not, the purpose of employing it is profit and that is enough."

It's a staggering claim and, tellingly, one that ASCAP touts on its web site as if people weren't making music well before it was commodified into what it is now: an industry like any other industry. Insofar as it's a business, music has a fundamental obligation to increase its earning potential, which is, really, why ASCAP and all copyright income still exists when it should have theoretically been supplanted by sales of recorded music, which didn't exist during ASCAP's genesis.

But as CD sales go in the tank and legal downloading still struggles to make up the slack, one of the traditional options for making a living in music's middle class is trending downward. Music publishing and licensing represents would seem to represent a viable alternative income source. After all, it's the one branch of the music industry that's actually growing.

So you have entered your music into the ASCAP catalog--any musician can, and for free--if not the catalog of its two smaller siblings, BMI and Society of European Stage Authors and Composers (SEASAC). Any club, venue, store, restaurant, radio, or anywhere else that plays music for the public and buys a license from ASCAP can now get access to your song. In turn, ASCAP keeps tabs on usage of your song with a variety of monitoring techniques, including submitted venue playlists and random sampling of radio programming, both digital and broadcast. (The specifics of sampling--time, duration, etc.--are kept under wraps, secret even to most ASCAP members.) If your song gets a spin on, say, 92Q, sophisticated computer software should recognize it based on matching waveforms.

All of these methods track, imperfectly, when and how often your composition is played, and that information enters into ASCAP's fuzzy calculation for how much that equates to in royalties. If the system does record a play of your song, the where and when is spelled out on a quarterly statement. If not, the statement just reads "no surveyed performances."

One of the biggest complaints about ASCAP from those who use it is that, for an organization that behaves in a quasi-governmental manner--demanding licenses, leveling penalties (by way of the court system, at least)--it has the transparency of the KGB. To many artists, ASCAP's royalty distribution scheme has little rhyme or reason beyond it being tilted in favor of known pop artists. As Robert Suggs, a professor at the University of Maryland School of Law specializing in copyright law, observes, "Very, very few musicians make their living off their ASCAP royalties."

You only get money from ASCAP when your song is sampled. If you're getting airplay on commercial radio, you'll probably be sampled, maybe quite a lot. If you're not getting airplay on commercial radio, the odds of never getting sampled is pretty high. If you are an independent artist, the odds of being on commercial radio tend toward zero.

"If you're included on a [PRO] survey, it's likely you'll get paid more than you should've," explains Paul Anthony, the CEO of Rumblefish, an independent music licensing company. "And if you're not, you get paid nothing. At all."

When pushed on whether or not ASCAP's sampling methods are equitable for its membership, at least in terms of live performance, Candilora responds, "A perfect world is a very expensive world. If we were to take everything that is performed live, get set lists, do you know what the cost of collecting and inputting all of that information would be? You have to look at the whole picture." It's a line that's echoed, almost word for word, in every available statement Candilora has given to the press defending his organization.

Rumblefish's Anthony is quick to rebut the idea that full sampling at venues is infeasible. "I think it's completely possible," he says. "Other countries do a phenomenal job of it." After a show "[band] managers make sure the band turns in their cue sheets to the club, the club turns in the cue sheets to the PROs, and everyone gets their PRO royalties. It's just on the checklist of things to do."

Anthony has an understandable reason to be scornful of ASCAP's methods. Rumblefish functions as a sort of proactive, microcosmic ASCAP, pairing music from its curated catalog with TV shows, stores, banks, advertisers, and anywhere else that needs permission to play a copyrighted composition. Instead of getting access to a vague catalog, Rumblefish clients get music tailored to their environments. Rumblefish artist clients also have the business actively working to place their music. And when the music does get placed, the artist knows exactly where and when and gets a check that month.

In Anthony's view, traditional PROs have "completely overcomplicated something that should be really simple. What an artist needs is to be able to look at their [ASCAP or BMI] statement and understand where their music has been used and how much the license has been sold for and what they get." His company, he says, maintains the philosophy that "for every dollar that comes in the door we need to be able to say how much money we got, how much we're taking, and how much we're sending to you. That's a pretty basic requirement."

Ask Candilora "What more could ASCAP do for its lesser-known artists?" and he replies, "I think ASCAP has a great deal to offer our up-and-coming songwriters." He goes on to tout a subprogram known as ASCAPlus. In an attempt to combat the perception of its supposed bias against unestablished artists, ASCAP initiated the program in 1960 to focus on musicians in the "early and mid stages of their careers," according to ASCAP's web site, performing in venues that aren't surveyed by ASCAP or having their songs performed via radio, television, or the internet channels that are likewise outside of ASCAP's survey scope. It's meant almost as a scholarship program, something designed to promote artists who aren't on ASCAP's monitoring radar, or far enough on it to see any checks come in.

Under the program, artists submit summaries to ASCAP of their "performance activity," and it's evaluated by panel of unnamed "distinguished music experts" who decide what, if anything, will be awarded. In recent years, ASCAPlus awards have worked out to less than 5 percent of total ASCAP royalty payments.

The awards themselves tend to be negligible, hovering around $100 and below. While certainly better than nothing, ASCAPlus puts the burden on the artist to self-monitor and report, while larger pop artists have both their own management and ASCAP tracking playlists.

Not only is it extra burdensome on working artists, but it's complicated and poorly promoted to ASCAP's membership. "I'm not sure how I would even do that," Casey Harvey of local shoegaze band Thrushes, an ASCAP member, says via e-mail. "They used to send me a quarterly letter that said, `Sorry you've had no public performances, and we're not sending you any money.' I don't get that anymore. Their royalty payment program is so ridiculously arcane. I can't begin to make heads or tails of it all."

There are, however, smaller artists for whom licensing fees make a difference. "I've easily made more money from publishing than I have from album sales," Rjyan Kidwell, aka local musical polymorph Cex (and an erstwhile City Paper contributor), explains via e-mail. The bulk of the money that has come in has been through having various Cex tracks as incidental music on television, mainly "MTV and one of the CSI shows," he says. Some of that money comes from ASCAP, from small performance royalties, but likely most of it came via independently negotiated contracts for a different right not covered by ASCAP called a "synching" right.

Still, Kidwell acknowledges that "[PROs] don't really tell you how to make the money. I don't think rock bands (especially bar rock, indie rock, fake-electro rock, any band plowing a real specific field over and over) should expect to be really doing much in the way of publishing, unless their label can pay for some kind of fortuitously timed radio campaign. If you've got a lot of money already, you can get more money from radio, which is pretty much the way radio has always been as I understand it.

"My advice to somebody that wants the ASCAP dollars is to make original, sprawling, cinematic music that doesn't overidentify with any popular genre or trend. And probably don't sing unless you're a girl," he adds. Meaning, make unobtrusive soundtrack music that might jive with a TV show or movie score. Again, however, only some of the money he's referring to comes from ASCAP; the rest comes from privately licensing his synch rights.

It might not be the best advice. ASCAP has been criticized by nonpop musicians for having a bias against instrumental and experimental music. Forms outside the mainstream can receive a fraction of the royalty rates of pop music, although it's difficult to pinpoint what that fraction is given ASCAP's almost comically convoluted royalty formula, described thusly on the organization's web site: "Use Weight X Licensee Weight X `Follow the Dollar' Factor X Time of Day Weight X General Licensing Allocation Radio Feature Premium Credits (for radio performances only where applicable) TV Premium Credits (for performances in highly rated series, where applicable) = Credits." In the equation, "follow the dollar" means that royalties paid for radio performance only come from radio license fees and so forth, according to ASCAP. (Film Music Magazine estimates "a minute of instrumental score is paid 3 cents or 16 cents on the dollar in contrast to a minute of most songs" for any "small performances.")

For Suggs, the problems with licensing and copyright go deeper than the practicalities of a working musician. He would seem the least likely person to speak against ASCAP or any of the three main PROs. Prior to his academic career, he was a copyright lawyer, defending the same rights that ASCAP protects. And, 12 years ago, he testified on behalf of BMI, as an expert witness. Yet, he states emphatically, "I think the scope of copyright is too broad. I would like to see an exception for all live performances below the megaconcert level. Anybody that wants to modify a composition, adapt it, whatever they want to do, they're free to do it."

It's a philosophical argument, and one he's interested in enough that he's working on a lengthy scholarly article about it. His basic premise is that live performance transcends, or should transcend, the ways in which we've commodified it.

"Copyright is analyzed as an economic phenomena, [and] the health of copyright is based upon the gross revenues of the record labels, movie studios, etc.," Suggs says. But the storytelling, music, and visual art that have become industries in the modern age existed long before businesses were founded to make money off of them. As Suggs puts it, "When we were hunting and gathering, when you or I could be lunch at the end of the day, we were devoting substantial resources to cultural expression. My argument is the way we create works, the way we experience works may be more important than the revenue generated. Shouldn't we at least consider whether we've lost something?"

It's an idea that would be lost on ASCAP's Candilora. In a telephone interview, it was clear that live performance matters relatively little to the organization, however much it regulates and influences it. Asked about how much ASCAP receives in license fees just from predominantly live venues like Load of Fun vs. predominantly DJ-driven clubs like Red Maple, Candilora responds, "I can't distinguish between live music and mechanical music."

Suggs' response when presented with the Load of Fun situation is less equivocal. "That's the sort of prohibition that's chilling," he says. "They're doing a performance that isn't supplanting, but may actually be augmenting sales. By requiring the $1,000 license a creative act has been squelched."

Load of Fun's Sherwin Mark wound up negotiating with an ASCAP district manager in New York, arguing his case more fervently than most venue owners would. In a recent conversation with City Paper, Mark exasperatedly explains that he said he'd "give [ASCAP] $1,000 if [it] gave us $1,000," as a donation. After all, his logic went, Load of Fun is grooming future moneymaking ASCAP artists, and so ASCAP should be contributing to the venue for its own sake.

ASCAP didn't donate $1,000 to Load of Fun, but it did negotiate with the venue to get it a different sort of license than the sort held by clubs that hold music events on a regular basis, a "Concert and Recital License," based not on the size of the room but the gross income from individual performances (with a $10 minimum, and irrespective of ASCAP licensed music performed). It doesn't allow any recorded music, so no DJs or music during gallery openings, but it costs a more affordable $200 a year. Mark seems reasonably satisfied but adds, "I'm still of the opinion that they ought to give us $200."

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The Short List (8/4/2010)

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