Lexington, KY - The letter came in late November to FatKats Pizzeria, which had opened in Lexington a few months earlier. ASCAP, the American Society of Composers, Authors and Publishers, notified owner Kathy Lyons that her business needed to sign a license agreement for the rights to play background music in the dining area.
"I had never heard of these people," said Lyons, who had owned and operated the Georgetown FatKats for more than six years, adding a Lexington location at 185 Pasadena Drive, just off Nicholasville Road.
That letter set off a back-and-forth discussion between Lyons and ASCAP representative Matt Fuller about just what Lyons' obligations were.
She explained to Fuller by email that she subscribed to the Galaxy Music service through Insight, which also provides her cable TV. Lyons had contacted Insight, which informed her that it paid for the music rights under her Galaxy contract. She relayed this to ASCAP.
"I am somebody who tries to play by the rules," said Lyons, who knew there were licensing concerns related to playing radio music in a restaurant and made sure she paid her cable bill as a business, based on the seating of her restaurant.
Fuller responded that even though she had a Galaxy contract, she needed to pay $336 annually for whatever music might be played on her TVs - including songs on commercials, halftime shows or other live or recorded performances.
Lyons said it wasn't the amount of money but the tone of the correspondence that did not sit well with her
"It has the tone of a debt collector," Lyons said, with each communication from ASCAP pushing her to fill out the contract.
When Lyons told ASCAP she needed time to contact her attorney, Fuller responded with a long list of court cases in ASCAP's favor, dating back to 1917. Lyons said the letter "basically bragged about the cases they have won."
ASCAP does have a very successful record on litigation against bars, restaurants and other businesses that use copyrighted live and recorded music.
Before contacting her attorney, Lyons researched on the Internet to give herself a quick lesson on the Music Fairness Act, the federal law that ASCAP enforces for its clients and their catalog of copyrighted music. Two similar groups, Broadcast Music Inc. (BMI) and SESAC (founded as the Society of European Stage Authors and Composers), serve the same function for their clients and their catalogs.
Lyons learned that restaurants under 3,750 gross square feet are exempt from paying royalties on radio and television music only. When she emailed Fuller to inform him that her restaurant was only 2,600 feet with no outdoor seating, he confirmed that she was exempt. But Lyons said that was only after an anxious week spent contacting other business people and the Kentucky Restaurant Association while she tried to figure out her situation. She was trying to save herself the expense of a call to her lawyer.
"When you're struggling to open a second location, any little hit is hard to absorb," said Lyons, who explained that her lawyer fee would have used money she wanted to spend on advertising. "Luckily, I was able to work it out myself."
The law behind the music
Stacy Roof of the Kentucky Restaurant Association said the compliance process often starts with a phone call from ASCAP to the business, asking an employee what kind of music is played there or if they have televisions.
Because of the size of the ASCAP catalog, Vincent Candilora, senior vice president of licensing for ASCAP, said his organization often assumes that some of its 8.5 million song catalog will be used where live or recorded music is played and that they do not research the size of the business before sending that initial letter.
ASCAP representatives have earned a reputation for what some might call bullying business owners into signing a license contract. But Candilora says "It isn't harassment; it's trying to help businesses comply with the federal law."
Not being in compliance can lead to fines of $30,000 per violation.
Roof said she knows "these companies (ASCAP, BMI and SESAC) can be very persistent." And "as a last resort," Candilora said, "we have to sue establishments."
The lawsuits often list a well-known recording artist as part of the suit, although Bruce Springsteen asked to have his name taken off one such lawsuit.
Roof said that in most cases, businesses that have music or TV broadcasts in their establishments owe some sort of licensing fees. That would include businesses that don't have live music. She said business owners sometimes think if they own a CD of music, they can play it in their establishment. But owning a recording and owning the rights to a song are two different things.
And while a restaurant or bar owner may just have TVs, their cable contract may or may not cover the necessary fees, Roof noted. An advertiser buying the use of a song for a commercial doesn't mean a business owner doesn't also have to pay for allowing that song to be heard in his or her business. Candilora said what an advertiser is buying is a "synchronization right" to use the music with video or a voiceover. That is different from the "performance right."
Some businesses larger than 3,750 square feet may also be exempt. How much a business has to pay depends on several factors, including whether the music played is live, recorded or both, how many TVs the business has and its square footage.
Candilora said that if Lyons had filled out the rate card, which includes a space to report square footage, ASCAP would not have collected a licensing fee from the Lexington FatKats. But Lyons said ASCAP either already knew or should have found out the size of her business before billing her.
After letting ASCAP's Fuller know that her Lexington location was exempt, Fuller responded by asking if Lyons knew anything about the Georgetown FatKats, which is similar in size and setup.
Lyons did not bother to respond.