Mr. EDWARDS. Before I ask the next witness to testify, how much do you pay per year approximately? Mr. DEION. Approximately $2,000, Mr. Chairman, to the three organizations. Mr. EDWARDS. Do people dance to that music? Mr. DEION. Yes. I charge an admission. Unlike some of the testimony here, I do have live entertainment, and I feel that I should pay a fee for the use of that live entertainment. Mr. EDWARDS. But do people dance to the recorded music? Mr. DEION. Yes, they do. It is mostly live entertainment. We have a jukebox, but that is separately licensed through the vendor that owns the jukebox. Mr. EDWARDS. Do you have a different view if they dance to this music that is copyrighted? Mr. DEION. Yes. As I said earlier in my testimony, I agree that some fees should be paid. I am totally-I support the basic, philosophical premise that the music is the property of the musicians, the composers, and the writers, and I would be the first to admit that I do derive some economic benefit from the use of that music. I have many musicians that then, in turn, collect money who are not licensed. I have many times asked my representatives why can't we come to some situation where I am licensed, for a reduce fee, and my artists are also licensed so that they, in essence, are the ones that select the songs. I have no control over the musical selections that a band or a group may play while they are on my stage in my establishment. Many times the representatives have said that because I am there, I am the fixed object, I am the one that is obligated to pay the license fee, and they express no concern in terms of collecting the fees from the musicians themselves. Mr. EDWARDS. Who pays the license fee for the live entertainment that you might employ? Mr. DEION. I do. Mr. EDWARDS. And how is that figure arrived at? Mr. DEION. I am not quite sure, Mr. Chairman. I receive Mr. EDWARDS. That's in addition to the $2,000 or is that included? Mr. DEION. No, no. In other words, between the three licensing music associations, my approximate annual fee is about $2,000, which I may add is in excess of my workman's comp premium and in excess of my liquor license renewal fee. Mr. EDWARDS. You pay in one check to all three? Mr. DEION. I pay over the year to each of the three organizations. Mr. EDWARDS. Separate checks? Mr. DEION. Separate checks, yes. And they all seem to come up with a different way of determining what my economic benefit is, and, hence, what the license fee should be for my establishment. Mr. EDWARDS. Counsel advises me that they don't talk together about how much they're going to charge. Is that also correct? Mr. DEION. I am not sure of that. Mr. EDWARDS. Apparently, some of the people here aren't sure either. Mr. DEION. With all due respect, Mr. Chairman, I have learned a lot about these organizations over my 12 years of business, but I would not profess to know everything that might be helpful in my situation, and I think that is one of the problems. I am not certain that there is enough information provided to us as a small business to deal efficiently or accurately with these organization. Mr. EDWARDS. That is very helpful. Thank you. We are now going to hear from Mr. Guy Gregg on behalf of the National Restaurant Association. Welcome, Mr. Gregg. STATEMENT OF GUY GREGG, THE PUBLICK HOUSE RESTAURANT, CHESTER, NJ, ON BEHALF OF THE NATIONAL RESTAURANT ASSOCIATION Mr. GREGG. Thank you, Mr. Chairman and members of the subcommittee. My name is Guy Gregg. I own the Publick House Restaurant, a moderately priced tablecloth restaurant in Chester, NJ. I am a former president of the New Jersey Restaurant Association, an organization whose members have been extremely vocal over their concerns with music copyright fees and practices. I am here today representing both my views and also those of the National Restaurant Association. Before I begin, I want to stress that the restaurant industry does not object to the fair payment to musicians for their original works. Our interest is in expanding the current homestyle exemption to permit establishments to have multiple televisions or radios and pay no licensing fees. We would also like to see the law expanded to exempt all incidental music in restaurants. This would help eliminate the badgering of our restaurants by agents of the music licensing organizations. As a businessman whose restaurant utilizes both background and music live performances, I am faced with copyright fees for both groups, and I pay ASCAP and BMI for both, but I believe the system is well overdue for reform. In the statement prepared by ASCAP, Mr. Gould says that we, as restaurants, should not demand free use of music in our establishments. Mr. Chairman, the music that we play on radios and television in our restaurants have already been paid for by the radio and television stations that broadcast that. I cannot charge my customers twice for the same meal. How can they charge twice or even more for a rebroadcast of music. I feel strongly that the legislation we are discussing today represents a fair and positive step toward updating music copyright law. We support H.R. 3288 which would eliminate the copyright liability on incidental music played on both televisions and radios in restaurants. The absurdity of having to pay for music from a commercial which may be licensed while watching a Redskins football game at a restaurant speaks for itself. We applaud Congressmen Thomas and Pastor for their efforts in introducing this legislation. We hope to build upon it. Reform, we believe, should expand upon the concept of incidental music in a restaurant or tavern, or for that matter, a dentist office or answering machine. We recommend that all incidental music, whether it be from a CD, a record, tape, radio, television, be exempted from licensing fees. The presence of background music in a restaurant or tavern is really no different than a cabdriver playing a radio. The music is genuinely incidental, not in any way used to attract customers. How many of you, for example, choose your dentist because of the music they play in their office. As for restaurants, someone decides to patronize the restaurant because of good food, good service, nice atmosphere, or convenient location. No one picks a restaurant on the quality of its background music. Therefore, the presence of that music should be considered incidental and warrant no fee. It is a different matter if an operator advertises this music to attract customers. That would fall under the definition of using music for direct profit, and should be handled differently. Similarly, I believe that compensating for live performances to be the responsibility of the performing artists. If I hire a guitarist on a Saturday night, that person should be licensed with ASCAP or BMI to perform their music. That, too, it seems to me would be an appropriate and equitable way to fund the system. That way, if a musician chooses to pay exclusively ASCAP or a BMI list, they can choose which one they wish to play from, and they would then not have to pay for a license for both. Even as the law stands right now, I do not have the option of paying either one group or the other because I can't get a copy of the song list from either group, and I don't know of a single restaurateur who has been able to do this. We are charged for playing certain songs, but we are unable to find out which songs are licensed by each group. If we are required to pay these organizations, we ought to have access to the list of songs each represents, and chose which organizations we wish to deal with. This all illustrates the very capricious and arbitrary nature within which the music licensing organizations work. I prefer to use music in the operation of my restaurant. To have music, I need to pay licensing fees to ASCAP and BMI. There is no other way around it. There is no competition for this service; it has all the negative attributes of a monopoly. Let me give you a personal example. For the past 11 years I have paid ASCAP and BMI. I just considered it a customary cost of doing business, just like paying my utility bill. When I first started in business 11 years ago, I paid about $200. Over the years that amount has increased to about $1,000. They always sent a bill; I always sent a check. Last year I received a statement from BMI that summarized my payments going back to 1986 for every year through 1993. It confirmed my payments and showed a zero balance for the years. I have included all of this information in my written submission. At the same time BMI kept requesting new information about my operation including financial statements. They threatened if I did not provide this information they would sue me. On the advice of our attorneys who assured me this pressure was illegal, I did not respond. In another letter BMI said because I did not provide their requested information they could pretty much charge me whatever they wanted. With that, I received a new statement that actually altered my old bill. Where once I had a zero balance, I now owed them money. Mr. Chairman, I cannot believe that Congress would pass a law that would allow things like this to happen. There is, to the best of my knowledge, no Federal agency, no congressional oversight monitoring these organizations, and there is no sort of third-party mechanism in place that would put businesses like mine on an equal footing with these licensing organizations. Even paying the fees is riddled with inconsistencies. The fee structure is rarely adhered to by the representatives of ASCAP and BMI. We know of deals cut for reduced fees for chains, and in New Jersey our association undertook a survey which showed wide fluctuation from nationally set rates. This is a subtle form of legal extortion, and it really does happen. You cannot fight them because it costs you far too much in legal fees than to just pay their invoice. A fellow New Jersey restaurateur, Frank Panico, who is right behind me, traveled with me here today. He is one of the few restaurateurs who chose to fight. Panico's is an upscale Italian restaurant with piped in music and a Saturday night piano player. Frank decided not to be bullied and refused to sign. ASCAP deployed one of its agent to surreptitiously visit Panico's and uncover the fact that Frank's piano player was performing music for which he had no license. They discovered four such songs, and sued Frank for $100,000 plus legal fees. Frank ended up settling for approximately $5,200 plus $2,800 in legal fees. This, for a fee that would have been $400 a year. To fight them further, he was told by his attorneys, would cost between $50,000 and $75,000. If the piano player had been individually licensed, and if the incidental music had been exempted from licensing, Frank never would have had to expend that tremendous amount of money and time fighting this organization. There is no legal recourse for us, Mr. Chairman. The system was developed to protect the rights of musicians, not to foster the subservience of restaurateurs. Unfortunately, that is exactly what the system has done. It has created a $100 million plus bully in the form of music licensing organizations who have their collective hands around the throats of restaurateurs. Mr. Chairman, we support H.R. 3288, and we would like to see it expanded. If a restaurant does use incidental music, it should not have to pay a licensing fee. Restaurants represent an easy target for these organizations. You can eliminate the tremendous problems we are facing by exempting incidental music from these licensing fees. Mr. Chairman, I would be concluding on that except I do have one further comment. I have listened today to testimony from both ASCAP and BMI and SESAC, and I have heard from the committee that they would wish us to try to get together. BMI was very accurate in saying that the New Jersey Restaurant Association and BMI have been speaking and attempting to come to a compromise. However, all of our efforts to have a meeting with ASCAP have been clearly not accepted. Thank you, Mr. Chairman, and I will be happy to answer any questions. [The prepared statement of Mr. Gregg follows:] TESTIMONY OF GUY GREGG OWNER, THE PUBLICK HOUSE RESTAURANT BEFORE THE SUBCOMMITTEE ON INTELLECTUAL My name is Guy Gregg. I own the Publick House Restaurant, a moderately priced tablecloth restaurant in Chester, New Jersey. I am a former president of the New Jersey Restaurant Association, an organization whose members have been extremely vocal over their concerns with the music copyright fees and practices. I am here today representing both my own views and also those of the National Restaurant Association. Before I begin, I want to stress that the restaurant industry does not object to the fair payment to musicians for their original works. Our interest is in expanding the current homestyle exemption to permit establishments to have multiple televisions or radios and pay no licensing fees. We would also like to see the law expanded to exempt all incidental music played in restaurants. This would help to eliminate the badgering of our restaurateurs by agents of the music licensing organizations. As a businessman whose restaurant utilizes both background music and live music performance, I am faced with copyright fees for both. And I pay ASCAP and BMI for both. But I believe the system is well overdue for reform. I feel strongly that the legislation we're discussing today represents a fair and positive step toward updating music copyright law. We support HR 3288, which would eliminate the copyright liability on incidental music played on both televisions and radios in restaurants. The absurdity of having to pay for music from a commercial which may be licensed, while watching a Redskins football game at a restaurant speaks for itself. We applaud Congressmen Thomas and Pastor for their efforts in introducing this legislation. And we hope to build upon it. Reform, we believe, should expand on the concept of incidental music in a restaurant or tavern or, for that matter, a dentist's office or an answering machine. We recommend that all incidental music, whether it be from a CD, record, tape, radio, or television, be exempted from licensing fees. The presence of background music in a restaurant or tavern is really no different than a cab driver playing the radio. The music is genuinely incidental, not in any way used to attract customers. How many of you, for example, choose your dentist because of the music they play in their office? As for restaurants, someone decides to patronize a restaurant because of good food, good service, a nice atmosphere or a convenient location. Nobody picks a restaurant on the quality of its background music. Therefore, the presence of that music should be considered incidental and warrant no fee. |