Businesses Want Music Royalty System Changed

When Phil Galdston walks into a restaurant and hears Vanessa Williams singing “Save the Best for Last” over the sound system, he figures financial gravy is on his menu.

As the songwriter, he earns a royalty when businesses play his copyrighted hits on CDs and jukeboxes or through replays of radio or television programming.

“Music is not like oxygen. It’s not free. Somebody created it and somebody owns it,” said Galdston, who has written hits for artists ranging from Celine Dion to Barry Manilow during 25 years in the business.

When bars or restaurants tune into MTV or a local radio station and replay his songs for their customers, “they’re profiting from my intellectual property,” he said.

But tavern keepers and restaurateurs are sounding a sour note about this arrangement. They argue that radio and TV stations already pay royalties for the music, and that businesses should not have to pay licensing fees when they only amplify what’s already on the free airwaves.

Led by the National Restaurant Association and the National Federation of Independent Business, the Music Licensing Coalition is pushing for legislation to change the royalty system. Sen. Strom Thurmond, R-S.C., and Rep. F. James Sensenbrenner, R-Wis., have introduced bills that exempt businesses that provide only broadcast music for their customers at no charge.

This change would reduce the income of the average songwriter by 15 to 20 percent, said Bill Thomas, a spokesman for the American Society of Composers, Authors and Publishers (ASCAP).

ASCAP and Broadcast Music Inc. (BMI) are the two major licensing groups that collect the estimated $900 million a year that songwriters and composers earn from television, cable and TV broadcasters and from the thousands of restaurants, bars and stores that play music for their customers.

Of course, ASCAP and BMI can’t actually count every time a particular song is heard throughout the country. Using complex formulas involving play lists and revenues, they figure annual fees to be paid by businesses ranging from oldies radio stations to skating rinks.

The licensing groups claim only minor fees are paid by individual restaurants for broadcast music - less than $5 a day for ASCAP, BMI and the Society of European Songwriters and Composers. However, the total is significant: $100 million or more.

Paying from several hundred to several thousand dollars to each licensing society every year is a substantial expense to many small restaurants, said Howard.

There is already a “mom and pop exemption” that says licensing fees don’t have to be paid by businesses that only use a single TV or radio “of the type commonly found in homes.”