HIRSA 263 Summer Street Boston, MA 02210 (617) 951-0055 (800) 228-1772 Fax (617) 951-0056 HRSA International Committed to the Profitability and Professionalism of Out Member Clubs May 7, 1996 Honorable Jan Meyers House Small Business Committee Washington, D.C. Dear Chairman Meyers: The International Health, Racquet & Sportsclub Association (IHRSA) urges you to support H.R. 789, the Fairness in Music Licensing Act. This legislation will provide fair protection for health clubs, restaurants, retailers and other mainstream American small businesses against the arbitrary pricing, discriminatory enforcement and abusive collection practices of music licensing organizations. The harassment and abuse which our small businesses receive from music licensing organizations such as ASCAP (The American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.) and SESAC, Inc. has been a serious problem affecting health club operators for many years. The Fairness in Music Licensing Act of 1995 exempts small business establishments like ours from paying licensing fees on purely incidental background music. It breaks the monopoly power which music licensing organizations have to set arbitrary fees and threaten costly lawsuits against those who do not comply. It establishes local third-party arbitration procedures for handling disputes and for determining reasonable fees, and it requires licensing groups to identify, on-line and in print, the music they represent so that users can have access to full "product information." Currently, users do not have this information available to them. Don't be fooled into thinking that the so-called compromise between the National Licensed Beverage Association (NLBA) and BMI and ASCAP does anything to solve the problems faced by health club operators. Under current law, as affirmed by recent Supreme Court decisions, small businesses are already exempt from paying copyright fees under the homestyle exemption for playing the radio as background music. Why is the NLBA agreement necessary? Also, the NLBA agreement is silent on one of the fundamental provisions of H.R. 789, the right to arbitrate unjust fees. Arbitration is the only way small businesses like health clubs could ever afford to fight unjust copyright fees. H.R.789 is not about cutting the royalties of songwriters. It is about the way in which ASCAP, BMI and SESAC operate and about long overdue changes that will make the system fairer for all music lovers. I urge you to support H.R. 789. In doing so, you will create a more level playing field and a better chance for survival -- for hundreds of thousands of small business establishments, including health and fitness clubs throughout the country. Sincerely yours, John McCarthy COLORADO LICENSED BEVERAGE ASSOCIATION COLORADO LICENSED BEVERAGE ASSOCIATION 1155 SOUTH HAVANA + SUITE 11-322+ AURORA, COLORADO 80012 May 6, 1996 The Honorable Jan Meyers Dear Congresswoman Meyers: As Executive Director of the Colorado Licensed Beverage Association, I applaud and thank you for holding a long overdo hearing regarding the practices of the music licensing societies. The Colorado Licensed Beverage Association strongly favors the efforts of the National Association of Beverage Retailers and other members of the Business Coalition in there efforts to bring about a livable business environment with the licensing societies. Even The unregulated practices of these societies have historically been arbitrary, usually unreasonable, strong arm, and harassing. when the societies are proven wrong, there is seldom if ever, recourse for the small business owner under the current regulations. If the Colorado Licensed Beverage Association can be of any assistance to you please feel free to contact me at (303)369-4147. WHY PASSING THE FAIRNESS IN MUSICAL LICENSING ACT IS THE RIGHT THING TO DO "The Fairness in Musical Licensing Act"—which nearly 170 U.S. Representatives are now cosponsoring-guarantees a fair shake for businesses that must pay music licensing fees to ASCAP, BMI and SESAC. Music licensing organizations wield monopoly-like power in setting and collecting their fees-and know they can count on lawsuit threats to get businesses to fall in line. The straightforward changes in H.R. 789 make the law fairer, simpler and more equitable. WHY H.R. 789? Because businesses should be exempt from licensing fees for incidental radio and TV music. H.R. 789 says businesses that switch on a radio or TV in the background-and that don't charge customers to hear the transmission-shouldn't have to pay licensing fees. This updates a 20-year-old "homestyle" exemption for radio and TV music that everyone agrees is outdated and confusing. It also ends "double dipping" by licensors. ASCAP, BMI and SESAC are now charging restaurants, retailers and other small businesses millions of dollars in licensing fees for background music even though radio and TV stations already pay huge licensing fees. WHY H.R. 789? Because there's no practical legal mechanism for disputing fees today. Any small business that doesn't fall in line with the fees the music licensors demand has just one option today: To go up against ASCAP and BMI lawyers in a New York City courtroom. That's the single federal court in the U.S. authorized to handle these disputes. Small businesses can't afford to do it. H.R. 789 proposes a third-party arbitration system to resolve disputes and determine fair and reasonable fees in a quicker, less costly manner. WHY H.R. 789? Because music licensors don't provide information on their product. Businesses have the right to know what they're paying for when they sign a licensing agreement with ASCAP, BMI or SESAC. H.R. 789 requires music licensors to provide easy on-line and paper access to lists of the songs they represent. That gives businesses the option of limiting their music to one society's repertoire. WHY H.R. 789? Because only Congress can pass the necessary changes. Over the past two years 16 states have passed consumer-protection laws guaranteeing businesses more equitable treatment from ASCAP, BMI and SESAC. But only the U.S. Congress can make the most fundamental changes. No state can authorize arbitration. No state can update copyright law to provide a clear exemption for background radio and TV music. It's time for the U.S. Congress to act. WHY H.R. 789? Because it makes the system fairer for everyone. No one's trying to get out of paying appropriate licensing fees or denying songwriters their just royalties. H.R. 789 is about structural changes that will make the system fairer for everyone. That means more compliance, less litigation, and better relations between the music licensing organizations and the small businesses who are their customers. National Restaurant Association Washington, DC 202/331-5900 Wall Street Journal June 26, 1996 BY PERRY ΜΟΥ Allow me to introduce myself. I am a pirate. No, not the sea-going kind. I steal music. There's no vessel, festooned with flags. Just a small Chinese restaurant I've run since 1964. We do not fire cannons. We fire woks. And the men who threatened me with a lawsuit weren't wearing uniforms at all. They were wearing Bermuda shorts. We'll call them "Sam" and "Dave." I noticed them one morning before lunch. They walked right past the "Please Wait for Hostess" sign and proceeded to inspect the place, top to bottom, like they owned it. Since I thought I owned it, I asked them, as politely as I could under the circumstances, if I could help. "No, just a minute," said Sam, waving me off. "Those are speakers," Dave announced a few long minutes later, pointing at my ceiling tiles. Indeed they were speakers, six tiny round things wired to my stereo, piping background music into a dining room that seats 80 customers when full. What of it? "You owe us $250, cash or check," Sam informed me. What for? "The music you're playing," he said. And if I didn't pay, I would be sued for thousands by something called "BMI." I had no idea what BMI was. And in the course of our rather fractious conversation, Sam and Dave never explained it to me or showed me any identification. I never learned their real names. But I have learned, in the years since I threw them out, a thing or two about their business: It's run like a classic protection racket. BMI (or Broadcast Music Inc.), like its You Play, You Pay larger competitor, ASCAP (the American And there's the kicker. If a restaurant How much are we supposed to pay? Good question. The agencies claim to base their (very different) rate schedules on complicated formulas involving the size of TV screens and the number of customers. But those formulas, too, are unwritten. We're simply told what to pay when Sam and Dave come by for a visit. I know a guy who has a place a few blocks from me. It's not much larger than mine. They charge him six times what they "quoted" me. Don't like the price they're asking? Tough. The only thing you can do is file a claim in federal court in New York City, where jurisdiction over ASCAP and BMI has been held since the 1950s. You might feel better, but it'll cost you vastly more in time and legal bills than you'll ever get back in reduced fees-if you win... Maybe you want to deal with just one licensing agency, not both, and you're determined to avoid copyright infringements on the other agency's catalog of songs. Good luck. Disk jockeys don't generally announce who licenses the song they're about to play. And the agencies don't. announce it, either. Next time they come by your restaurant, try asking Sam and Dave for a list of the music they're demanding you buy. They don't have one. Word of this scam has finally reached the government. Rep. Jim Sensenbrenner (R., Wis.) has introduced legislation to exempt small businesses that use purely incidental background music from copyright licensing obligations. He would establish a local thirdparty arbitration system for resolution of billing disputes. He would require BMI and ASCAP to make available to the public full information about their respective repertoires of music. And the agencies' too often abusive and arbitrary contract and collection practices are also under legislative consideration in almost 20 states. For some reason I never heard back from Sam and Dave. Maybe my eye patch and wooden leg frightened them off. Mr. Moy is the owner of the Plum Garden Restaurant in McHenry, Ill. Music Licensing American Dental Association American Greyhound Track Operators Association American Society of Association Executives Club Managers Association Electronic Industries Association Hair Cuttery, Inc. International Association of Amusement Parks and Attractions International Association of Auditorium Managers International Health, Racquet and Sportsclub Association International Planned Music Association Laurel Park Muzak National Association of Beverage Retailers National Association of Home Builders National Automobile Dealers Association National Federation of Independent Business National Religious Broadcasters Music License Committee National Retail Federation National Retail Hardware Association National Shoe Retailers Association Pimlico Race Course Society of American Florists The BSG Company |