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Madame Chairwoman and distinguished members of the Committee, thank you for inviting me here today.
My name is Tommy Tavenner, and I own the Silo Inn in Olney, Maryland. My dad opened the restaurant back in 1965, when Olney wasn't a whole lot more than a single intersection. As the town grew up around us, we grew too. We now have about 50 employees at our restaurant and pub. I am testifying today on behalf of the National Restaurant Association, and I thank you for holding this hearing.
First, let me say I'm a musician and a still-practicing amateur composer myself. I wish I could say I've gotten far enough to be licensed by ASCAP or BMI...but I haven't. I do, however, understand the importance of protecting authors and publishers.
I've paid licensing fees to ASCAP and BMI for nearly 30 years now. For two nights of live music a week, we pay about $2,400 a year. Sometimes I feel like the biggest fool in Maryland: After all this time, I have no idea what I'm paying for or why I pay what I pay. I have a file as thick as an encyclopedia documenting my efforts to understand the rates. Included in that are what I call the "New York lawyer letters"—the letters from ASCAP threatening me with lawsuits for failure to pay what I'm told to. It's a strange way of doing business. Unfortunately, current law appears to let them get away with it.
"Scam" is a harsh word to use, but I've heard enough stories about my colleagues and their experiences to convince me that "scam" is not an inappropriate word to describe what is happening to us. Let me share some of the other stories
►A BMI agent who came into a Phoenix restaurant during business hours, threw a yelling fit at the restaurant owner and her mother, and threatened to bring in a federal marshal if she didn't sign a new contract.
A catering hall owner in Maryland leases his facility to dance instructors one night a week. The dance instructors pay $300 for the music. ASCAP asked the hall owner to pay $880—for the same music.
A Massachusetts bar owner keeps the volume on his TV set turned off but turned it up at the beginning of one World Series game. A few weeks later a music licensing representative called him and demanded money because the game carried a licensed version of the national anthem.
Although ASCAP and BMI have spent thousands of dollars on ads over the past year trying to convince Congress these problems don't exist, the examples of arbitrary prices, litigation threats and abusive collection I've cited are real. I didn't invent them. They actually happened. In fact, they are happening every single day in small businesses around the country.
That's why two years ago the National Restaurant Association joined with a broad coalition of other businesses—including the National Retail Federation, the NFIB and others—to ask Congress to make some changes.
We're not asking for charity, for special treatment or favors of any kind. We're small businessmen and women who pay our own way and pull our own weight. What we want is a fair way to do business.
Our courts have long recognized that whenever a handful of companies control one market, there's a potential for abuse. That's why ASCAP and BMI currently operate under court orders to prevent them from misusing their power. Unfortunately, however, the last 40 years have shown that these orders don't provide any real protection for small businesses.
The biggest problem is that these court orders don't give small businesses any practical way to challenge ASCAP, BMI or SESAC—and the music licensors know it.
If you don't understand the fees, if you object to your being charged one fee while the business down the street is paying a wildly different rate, or if you can't get a straight answer about what music each society represents, you have just one option: To file suit in one federal court in New York City.
To use the word "arbitrary" in describing the tactics of these organizations is the ultimate understatement. In my case, it took me three years to get ASCAP to reduce my fees when we decreased our music program. For the last three and a half months, I've been trying to get a credit I'm entitled to for overpaying in 1995. I can cite example after example of these kind of rate disputes.
But you learn quickly that if you question anything, a lawsuit threat isn't far behind. Over 60% of National Restaurant Association members surveyed recently reported that they had been threatened with lawsuits or other pressure tactics to get them to sign a contract-even though the music licensing representative had no idea what songs were being played.
Like most small businesses, I don't have a lawyer on staff, I either have to rely on my own sawy in dealing with ASCAP and BMI or hire a lawyer. Madame Chairwoman, as a small business owner I simply don't have the resources to go up against an army of ASCAP or BMI lawyers in a rate court in New York City. I can't think of a single small business owner I know who could do it.
We need a system that works better for the little guy. I am here to ask you to support H.R. 789, a bill that now has the support of 170 members of the U.S. House and that proposes clear and simple changes that would make it a fairer system.
First, H.R. 789 would make it clear that businesses are not required to pay licensing fees when they flip on a radio or TV in the background. ASCAP, BMI and
SESAC already collect millions in licensing fees for this music from radio and TV broadcasters. To get a business owner to pay up because something we have on in the background—like a commercial jingle that plays during a TV show—is excessive.
Second, let's find a way to resolve fee disputes by arbitration in the location where we do business. H.R. 789 would let us take our problems to, and get them resolved by, a third-party arbitrator. The music societies say this is totally unacceptable; they want to force all music users in every state to go to court in New York City.
Third, let's make sure businesses can get information on the product music licensors sell. Right now a business owner who tries to save money by playing music from just one group's song lists is out of luck. That's because ASCAP, BMI and SESAC routinely refuse to provide business customers with these lists. We should at least be able to understand what we're paying for. H.R. 789 requires the music licensors to give us access to paper and on-line lists of their songs.
I also think it's important to tell you what H.R. 789 would not do, because I think there's a lot of misinformation out there. It doesn't exempt any business from paying licensing fees for CDs, tapes or live music. It doesn't deny songwriters royalties.
Before I end, let me add one other thing. The National Restaurant Association, the NFIB and other members of the Music Licensing Coalition have been working to find a resolution both sides can live with. A few months ago, the National Licensed Beverage Association split off and came up with its own "compromise" with ASCAP and BMI. I want to make it clear that the National Restaurant Association, the NFIB, the National Association of Beverage Retailers and other members of the Coalition do NOT support this agreement. While it may cover some of the NLBA needs, it doesn't satisfy a majority of the foodservice industry or other members of the Coalition.
It proposes an extremely narrow business exemption for radio and TV music. 1, and a majority of my colleagues with legitimate complaints about the way the music licensors operate, would get nothing out of this plan. It discriminates against retailers. It says nothing about arbitration, one of the most important pieces of H.R. 789. It says nothing about access to music lists.
In the past year 16 states have passed music licensing reform bills. That's nearly one-third of the states, and more are considering it. But some of the biggest problems like arbitration and a meaningful definition of the business exemption-need federal answers. It's time for Congress to take action.
BMI, ASCAP and SESAC like to portray us as a bunch of greedy small business owners trying to deny fees to songwriters. I'm willing to bet that if a songwriter came to my restaurant and got some idea of the way ASCAP and BMI
charge and collect fees on their behalf, they'd know why we're sitting here today and asking for changes. They'd also know why many of us small business owners are just giving up or cutting back on music rather than deal with these syndicates.
I had to think long and hard about speaking out today against the copyright establishment. Speaking from past experience, I know that could have some serious ramifications; small businesses don't have a lot of power in this very one-sided relationship. But my faith in the system encourages me to be here.
Madame Chairwoman, thousands of small businesses have paid the piper for years. That's not the issue. The issue is whether small businesses should have to pay the piper again for TV and radio music that has already been paid for. The issue is how ASCAP and BMI operate, what information they give to their customers, and where music users can turn when problems develop.
The issue is whether we live under the rule of laws that are clear and fair, or under the arbitrary rules of ASCAP, BMI and SESAC, who for all practical purposes are accountable to no one.
I'd be happy to answer any questions.