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A Royalty Pain in the Ass 

A Lakewood coffeeshop goes indie to dodge the copyright bagman.

No pay, no play: Phoenix Coffee Co. owner Julie Hutchison. - WALTER  NOVAK
  • Walter Novak
  • No pay, no play: Phoenix Coffee Co. owner Julie Hutchison.

The word "independent" doesn't begin to describe the music programming at the Phoenix Coffee Co. on Detroit Avenue. In April, owner Julie Hutchison decided not to sign a licensing contract with BMI or any other performing rights organization. To play by the rules without such an agreement, she has limited herself to background music from a very narrow playlist — exclusively original, unlicensed music by local musicians. And on some days, she plays the radio. College radio.

It's a situation every business that plays music must confront eventually. Copyright law requires that any business playing music, whether recorded or live, must pay a licensing fee. Performing rights organizations such as BMI and ASCAP (Broadcast Music Incorporated and the American Society of Composers, Authors, and Publishers) collect the fees and pay the dividends.

Jerry Bailey, BMI's director of media relations, says, "People don't realize they can't just use someone's music. When you buy a CD, you have the right to play it in your home or in your car or anywhere for personal use. Once it is used in conjunction with a business, licensing restrictions apply. It can be kind of a shock to people."

BMI points to studies that show how music can increase a business's profits. Slow music, the company claims, increases bar bills, while fast music helps restaurants turn their tables over more quickly. Hutchison, for her part, says that nothing in Phoenix sales records indicates that people come to hear the recorded music. Conversely, she says, airplay in her shop helps sell music at the record shop next door.

The licensing organizations collect money through annual agreements with businesses, and then they pay royalties to the songwriters and the recording companies. When the average radio station plays a song, for example, it pays a licensing agency about six cents — three cents each for the recording company and the songwriter. The singer or band performing the music, unless it is one and the same as the songwriter, benefits only from the publicity that comes with the airplay.

The size of the fee paid is determined by the size of the establishment. Located across the street from coffee giants Arabica and Caribou, the Phoenix is a tiny shop that seats just eighteen people. Music licensing fees would cost $200 a year. Hutchison's main concern, however, is how dividends are allocated to musicians. "I don't believe anything I pay would go to the musicians whose music I play," she says. "BMI doesn't ask me for a playlist."

Indeed, the licensing agencies don't make payments to all the musicians who register songs with them. Bailey says that dividends are calculated based on reports from radio stations, music services, and the top-200-grossing concert tours. Money is divided according to the number of occurrences of a song. According to Bailey, "It's basically correct that, if a songwriter isn't in the top 200 acts and doesn't get radio, TV, or music service airplay, there's no benefit from BMI — unless the song is picked up for a movie or some other purpose down the road."

Bailey says that collecting playlists from every coffeeshop, bar, or restaurant BMI services would make music licensing much more costly. A nonprofit organization, BMI pays back to songwriters and publishers 82 percent of the fees it collects. Higher expenses would reduce that amount — a fact that would mean nothing to artists who receive no dividends in the first place.

In addition to her doubts as to whether the musicians whose work she played would get any compensation from BMI, Hutchison says she didn't appreciate the company's tactics in approaching her. "Last year, they sent a letter, which I ignored because I wasn't familiar with them," she says. "In April, they sent a letter via certified mail, which I took more seriously. The tone was very manipulative, as if I had no choice but to pay, so I started talking to my lawyer."

It was at that point that Hutchison began playing exclusively original, unlicensed music. "Coincidentally, we had been talking about playing just local music here. So we started playing Drumplay and Sam Phillips discs, and a sitar disc. After a while, a BMI salesperson followed up by phone, acting like she'd never heard of improvised, original music," Hutchison says.

Like the salesperson, Bailey is skeptical of the possibility of sticking solely to unlicensed, original music. "Theoretically, yes, it's possible for an establishment to play exclusively unlicensed songs, and if that were the case, we wouldn't have a problem. In all likelihood, that would be difficult to do reliably."

While Hutchison says her employees have begun to tire of the limited music selection, she's found relief on the radio. "They don't tell you this, so you've got to figure it out for yourself, but if your shop has less than 3,000 square feet, you can play the radio without paying a fee. So we've been playing college radio stations, mostly WCSB."

To expand her playlist, Hutchison has invited local bands to send her copies of their original, unlicensed material. "We'll play them in the store. We can sell copies here, too. I really want to support local music."

With the work of local artists hanging on the walls and its decidedly non-corporate ambience, the Phoenix has a loyal clientele that favors the owner-operated, personal touch. Hutchison says that customer response to her musical choice has been favorable. "Most of my customers don't care what kind of music [is played] or if there's any music at all. They come for the coffee. But some people have said they appreciate what we're doing for local music. We've gained a few customers by word of mouth, especially musicians."

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