Since 2022, the student musicians in Mountlake Terrace High School’s jazz program worked a fun gig at Baguus Little Asia, a nearby restaurant in the suburb north of Seattle.
Six times a year, owner Takao Kikuchi offered student combos a chance to play for diners, and afterwards, he’d treat each kid to a meal. Kikuchi would also donate some of the sales generated from the performances to the school jazz program, which has experienced funding cuts in recent years. Meanwhile, his restaurant got some promotion out of the deal.
Then, in May, Kikuchi suddenly decided to stop hosting live music. His decision came after he was contacted by a representative at Society of European Stage Authors and Composers (SESAC), one of several performing rights organizations (PROs).
“They said, we are playing live music, so they told me I have to pay licensing fees,” Kikuchi told KNKX.
PROs are companies that represent songwriters, composers and music publishers and collect royalties from the live performance of their copyrighted works on their behalf. Per U.S. copyright law, any establishment that presents live or recorded music must obtain a “Public Performance License” from a PRO to legally use copyrighted music they represent for performances, overhead house music, jukeboxes, and even karaoke.
For years, this relationship between venues and PROs has gone on behind the scenes as a necessity of live music presentation. But, as more PROs have emerged, and rising costs make it more difficult for grassroots music venues and third places, like restaurants, to keep live music going, PROs are drawing more scrutiny.
In February, the U.S. Copyright Office opened a federal inquiry into the proliferation and practices of PROs, like the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI), who assert this system ensures creators get compensated for their original material.
Meanwhile, grassroots music spaces, including several in the Seattle area, contend that the business practices and rising number of PROs looking for payment, are exacerbating the struggle of independent venues and musicians.
The evolution of PROs
Performing arts organizations have been around since 1914, when ASCAP formed. In the ‘30s, came two more: BMI and SESAC.
Today, ASCAP, BMI, and SESAC represent the majority — millions — of musical works between them, including jazz works new and old. And in the last 12 years, as a result of new technologies and competition in the market, three more organizations, Global Music Rights (GMR), AllTrack, and Pro Music Rights, emerged.
If you own a business that hosts live music — whether that's a jazz combo or a cover band — licenses are legally required or you might face litigation. Other types of royalties, such as streaming, aren't the PROs' territory.
Additionally, to reduce their risk, establishments must pay to license with each PRO because each organization has their own copyright holders and music catalogs that they represent. Licenses can cost anywhere from hundreds to thousands of dollars per year per PRO.
“Since a license with ASCAP and/or BMI does not grant authorization to publicly perform songs in the SESAC repertory, most businesses obtain licenses with all three in order to have proper copyright clearance for virtually all of the copyrighted music in the world,” states SESAC’s website.
‘No way’ to profit
Each PRO calculates their licensing fees differently, but they are typically based on specific criteria like a venue’s capacity, whether they charge admission, and how many nights a week they have music. PROs then use these fees to compensate songwriters, composers, and publishers in the form of royalties.
“They deserve fair compensation, and the licensing fees collected by BMI go to the songwriters and composers behind the music that is played publicly in the form of royalties,” said Jodie Thomas, executive director of communications and media relations at BMI.
Representatives from ASCAP and BMI told KNKX that they work hard to make sure licenses are affordable and transparent for small business owners. That said, some business owners in the Seattle area say they’ve stopped presenting live music due to the licensing costs and the way PROs do business.
Robert Fontaine, who co-owns Soundbite Cider in Everett, Washington, has a taproom covered in musical instruments and memorabilia. But he’s found that bringing the real deal into his small cidery isn’t so accessible.
To stay in compliance with the PROs, Fontaine once paid ASCAP, BMI, and SESAC approximately $900 to $1000 dollars annually to present admission-free live music, as well as host open mic and karaoke nights, and play music from his jukebox. He was also contacted by GMR but never licensed with them. In 2023, he decided to stop live music in all capacities and cancel his existing licenses.
“This location isn't big enough to warrant paying $3,000, $4,000 a year for music licenses. Max capacity here is 40, so even if we sold $10 tickets, $20 tickets, we wouldn't make any money at it,” Fontaine said.
Jarred Swalwell, co-owner of Drumlin, a bar and café 15 miles south in Shoreline, recently made a similar decision. They’ve hosted live music since 2020, but said there is “no way” they can profit from live music, even with bar sales and ticket fees. Swalwell attributed this to increasing costs of food and labor, low audience turnout, and the expense of the PRO licenses.
Growing skepticism
Beyond finances, regional grassroots venue owners are skeptical of the way the PROs do business. This echoes challenges outlined in the federal inquiry, which states PROs “do not all disclose comprehensive information concerning the works that are covered by their licenses, and their royalty distribution practices and policies.”
Leah Park, who runs Shoreline restaurant and jazz venue North City Bistro with her husband, was confused and put off by the aggressive way that PRO representatives reached out by email, post, and phone. She said they threatened litigation if Park didn’t meet their demands.
When Park and her husband took over the music venue in 2022, she assumed all was on the up and up, so these requests seemed “sketchy.”
“It reads like a spam email, like someone trying to bribe you out of money, and you're like, ‘uh, yeah, I'm not responding to that,’” she said.
Ultimately, Park did pay all the license fees, but it’s not unusual for venue owners to outright ignore PRO communications. In June, ASCAP sued Ballard’s Pono Ranch for copyright infringement. An ASCAP representative told The Seattle Times they had contacted the music venue for several years and “over a hundred times” to get a license.
ASCAP Chief Marketing and Communications Officer Lauren Iossa told KNKXintegrity that all their licensing reps “undergo robust training and abide by a Code of Conduct” and that they must “conduct themselves lawfully and with the highest level of professionalism, honesty and integrity.”
Venue owners that spoke with KNKX said PROs reached out after seeing social media posts about their business presenting live music. They also expressed confusion about where their licensing fees are going, because they haven’t heard of the money directly benefiting the artists on their stages.
“One of my biggest concerns is I want to support the artists,” Fontaine said. “I want the money that I'm paying to be able to go to the artists that I want to support, but it's not happening.”
PROs represent songwriters, composers, and music publishers — not solely performing musicians. PROs would only pay a musician royalties for a performance if they also wrote the songs performed. As a result, most local musicians won't receive these royalties. Additionally, which songwriters do see payment doesn't necessarily reflect the music local audiences are hearing.
The reality of royalties
Still, even when an emerging or independent musician performs their original compositions live, they’re not seeing much regular money from it, according to Tobi Parks. Parks is a copyright lawyer and board member of the National Independent Venue Foundation, a nonprofit dedicated to fostering a competitive, fair, and inclusive marketplace for independent performance venues and promoters in the U.S..
Parks explained that PROs generally determine royalty payouts through analog data like top tours and radio airplay, not by actual setlists of what’s been played in venues around the country. As a result, the most popular performing songwriters, like Taylor Swift, often end up hoovering up more than their share of the royalties.
“I call it a form of trickle up economics,” Parks said.
This isn’t necessarily the fault of the PROs, she said, but of a massive usage data gap, resulting from an overwhelming reliance on manual data reporting that often just doesn’t happen. While all the PROs provide artists the opportunity to report the songs they performed to collect more accurate data on who should receive royalty payments, most artists and venue owners don’t know they should submit setlists to the PROs.
“I think that there has to be education for artists coming into the space and understanding who the PROs are and what they do and why they do it, and I think for business owners as well, you know? There's a huge education gap on both sides,” Parks said.
Seattle-based Latin Grammy-nominated jazz musician and composer, Jovino Santos Neto, does submit his setlists to BMI on a regular basis. Santos Neto plays his own music regularly, and said that on any given night, “at every third venue in Seattle, there'll be a band playing one of my compositions.”
Santos Neto values the PRO system, which allows him to make some money from his compositions that would otherwise be lost in a “black hole.” Still, he said the royalties he makes are “absolutely not” a major part of his income as a musician.
“I don’t know how that is calculated,” he said. “Put it this way, it would not pay my rent.”
The federal inquiry
As some businesses stop presenting music and up-and-coming artists lose places to play, a variety of independent venue owners began to organize and lobby for federal oversight on the PROs system in 2022.
After a request from members of Congress, the U.S. Copyright Office (USCO) opened a "Notice of Inquiry" regarding PROs in February. The process involves gathering public comments to determine the need for additional rulemaking. Between February and May, the office received 5,000 comments.
On Nov. 20th, the USCO published a letter that reported their analysis of the inquiry's findings to members of congress. The letter summarized key takeaways from the comments, including that "music licensors, and some licensees, believe that PROs provide significant efficiencies to the music ecosystem," but that "the addition of new PROs undercuts current efficiencies and increases licensees’ legal risks."
In an early November email to KNKX, ASCAP underscored a fervent desire to prevent this inquiry from further devaluing creators' work.
“This effort by licensees is nothing new; it is yet another in a long line of legislative and legal efforts by business owners who want to pay songwriters and composers little or nothing for the use of their music," ASCAP's Iossa said.
Parks, who was involved in lobbying for this inquiry with the National Independent Venue Foundation, said independent venues aren’t necessarily looking to legislate. The goal is "easing" the music licensing process to “make it better for everybody involved."
It seems steps are already being taken in that direction.
Prior to the latest USCO findings, BMI‘s Thomas told KNKX that they are working toward more data transparency. The November letter mentions that BMI, ASCAP, GMR, and SESAC are developing Songview, a first-ever centralized platform for comprehensive public performance copyright information. The letter also highlighted that both PROs and licensees think further education about PROs operations and copyright would be beneficial.
As far as local artists and venue owners were concerned, bringing more transparency and empathy to the PROs process may not be enough to make live music profitable again, but it would certainly encourage businesses to reconsider axing it altogether.
As Soundbite Cider’s Fontaine shared: “If I knew that the money I was paying them was going to the artists that were creating the music that I was playing in my place, I would feel better about it.”
