One Small Bar Settles A Large Bill With The Biggest Music-licensing Company. What About The Rest?

Once a destination party zone, the Flats is between identities right now, as preliminary work gets under way for a massive project that promises shiny new retail, office and residential spaces. The East Bank is the perfect place, Michael Tricarichi believes, to establish clubs before new condo residents and office workers start arriving en masse. Right now, however, it's a ghost town most nights, a place where most entrepreneurs would fear to tread.

Tricarichi is president of Telecom Acquisition Corp., which owns six properties on the East Bank. One of those is Roc Bar at 1220 Old River Rd. (the little room that used to be Club Atlantis, adjacent to Scripts). Tricarichi bought the Roc Bar building in 2006 and opened the club in February 2008. Business is up and down; booking the occasional touring act helps him get by.

In March, still during the winter slow period, he was hit with three bills for playing music. The bills were expected; the amounts - $2,000 each - were a shock. So Tricarichi did something almost unheard of among the small business owners nationwide ponying up such fees annually: He fought back. And won - sort of.

Every time copyrighted music is played in public - on the radio or a jukebox, spun by a DJ or covered by a live band - royalties are due. If you're somewhere watching something and copyrighted music sets the mood, someone is owed cash.

The three public performance rights organizations - American Society of Composers Authors and Publishers (ASCAP), Broadcast Music Inc. (BMI) and the Society of European Stage Authors & Composers (SESAC), which, despite its name, also represents U.S. artists - collect and distribute money on behalf of artists and musicians whose work is registered with them. ASCAP is the largest, followed by BMI, with SESAC a distant third. They deal with every entity that plays music, from TV networks and pro sports leagues, down to local businesses. When they catch wind of a new club, local representatives get the schedule, find out what the capacity is and present the venue with a bill. If the club ignores the bill, the organizations can sue, asking for potentially more than $100,000 per song. And sue they will.

In 2005, ASCAP sued the 602 Bar in Glendale Heights, Illinois - which had no ASCAP license - after a band covered Led Zeppelin's "Whole Lotta Love" (in a suit widely perceived as a dick move). ASCAP explained it as a routine matter and said it files 200 or so similar suits a year. In 2007, one round of ASCAP lawsuits named 27 venues, citing unlawful performances of AC/DC's "Have a Drink on Me" and Iron Maiden's "Run to the Hills." When Tricarichi got his bills, he thought that the rights companies were asking too much.

As a starting point, the three organizations assume that all bands play covers. Bills are based on the club's maximum occupancy. The fire department has cleared the Roc Bar to hold 275 patrons, but it's lucky to draw that many once a month with a concert by a national touring band. And every kind of entertainment a club offers - whether it's live music, dance DJs, TV, karaoke and/or covers for the entertainment - incurs an additional annual fee, with no bundle discount available.

"It's extortion, pure and simple," Tricarichi declared in a press statement in May, when his attorneys filed suit. "They walk in here and demand money and threaten you if you don't pay. In my case they demanded almost five times what other similar bars in the area are paying. … I'm willing to pay what's fair, but I won't be bullied by them."

Most club owners won't hire a lawyer to contest a $2,000 fee. After hourly rates and court costs, it's just not worth it. But Tricarichi has lawyers on retainer, and he likes a fight. So he sued ASCAP and BMI, citing a virtually unused provision that allows music users to challenge licensing companies' rates. (The two organizations had previously been sued as alleged monopolies and are subject to a federal consent decree that made his suit possible.)

This summer, the case against ASCAP went to federal court in Cincinnati. It was an unusual case, the first of its kind in Ohio. Tricarichi's lawyers could find just one other precedent. The judge made favorable preliminary comments and started asking questions about where the rates came from. Things were looking up for Tricarichi. But everybody involved had better things to do than drive back and forth to Cincinnati. ASCAP offered lower rates - Tricarichi and his attorney can't say how low - and the parties settled.

Tricarichi has a suit pending against BMI, and SESAC is "in contact" regarding its dues. Since word got out about their successful challenge, Tricarichi's attorney has been contacted by other bars. Fighting the companies is still a long-term investment if you're worried, as many bar owners are, about just paying for your Tuesday beer order.

"Often, club owners, at least in the Midwest, view this as a shakedown," explains Mark Avsec, a Cleveland-based attorney who specializes in intellectual property. Avsec knows the company line, but he's no soulless suit - he has played keyboards with the James Gang and written songs for Bon Jovi, Donnie Iris and others. "But they must understand that songwriters are trying to make a living as well. Bar owners should appreciate that not all songwriters are millionaires like Paul McCartney, not that he does not deserve the same protection. Lots of songwriters are middle-class folks. I supported a family for many years largely through my ASCAP royalties."

Still, club owners say it's a pain in the ass to get an annual bill for $1,500 every January, the worst month of the slow season. As Tricarichi's suit asserts, the process is arbitrary and flexible, with numerous gray areas.

Matinee Cleveland owner Mario Nemr describes his interaction with SESAC like he's talking about a collection agency. When Nemr bought the bar this year, the company contacted him and asked for a payment between $500 and $1,000, based on his weekend schedule of live bands. (His jukebox is covered in an agreement with a vendor.) After a series of calls, the rep finally listened to reason: It's a small bar, few if any of their artists' music is played there, no cover acts play and the groups are local purveyors of original indie-rock. He says SESAC accepted a lower figure. "It's like paying the mob off," says Nemr. "You tell them what you're doing how many nights, and they give you a rate, based on your capacity. If you give them money, they're not going to bust your balls. If you have lawyers, it's worth fighting. But for me, it's a headache I can make go away for $250."

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