Associations & Music Licensing Fees

By Merle Hass, Esq.

Does your association allow music to be performed in the common areas? Show movies in the clubhouse? If so, even if your facilities are not open to the general public and they appear to be private and small-scale, you are probably obligated to pay a licensing fee to one or more licensing entities, such as ASCAP (American Society of Composers, Authors and Publishers); BMI (Broadcast Music Incorporated), SESAC (Society of European Stage Authors and Composers); or MPLC (Motion Picture Licensing Corporation). If you don’t, you are exposing yourself to considerable risk.

ASCAP and BMI were in the news in a February 3, 2012 New York Times article describing difficulties politicians have in choosing campaign songs. “Eye of the Tiger” and a song called “Wavin’ Flag” have been, according to the article, removed from the Republican play list. Although the problem at issue was not the payment of licensing fees, even political candidates need to pay such fees. In addition, politicians risk lawsuits on other grounds, for instance if the use of an artist’s song suggests that he or she supports the candidate.

To understand why it is prudent to pay to use music and show movies, it is useful to know some basic principles of copyright law. According to the website of the United States Copyright Office, “Copyright is a form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression.” Copyright law “protects original works of authorship, including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture.”

The owner of the copyright has the exclusive right to perform, or to allow another to perform, the work publicly. “Publicly” means “to perform or display [a work] at a place open to the public or at any place where a substantial number of persons outside of a normal circle of family and its social acquaintance is gathered” (17 U.S.C., § 101(1)).  To prove copyright infringement, a person must show, among other things, that the work in question was performed publicly for profit, without permission of the copyright owners.

Since there are very few published opinions concerning the liability of community associations for playing music or showing films, the rules in this area are derived in large part by analogy and inference. It seems safe to say that you can play the radio in the common area if you transmit it “on a single receiving apparatus of a kind commonly used in private homes” (17 U.S.C. § 110(5)).

Beyond that, matters get substantially murkier. In a case involving a condominium clubhouse that held a dance on its premises, during which copyrighted songs were performed, the Court held against the association. It rejected the argument that the clubhouse was private and that it was “merely an extension of the residents’ living rooms” (Hinton v. Mainlands of Tamarac,  611 F. Supp. 494, 495, 496 (S.D. Fla. 1985)). The Court found unpersuasive the claim that the clubhouse was a common area in which each owner had an interest. And it rejected the argument that the Association did not charge an admission fee but instead requested a $3.00 donation, noting that donations “are often merely euphemisms for ticket prices.”

Celluloid Heroes (or Villains?)
It appears that the showing of films is subject to the same analysis—and to the same protection. For example, on its website, MPLC takes the position that an organization needs a license to show a film: even if it owns the DVD; even if it doesn’t charge admission; even if it’s a nonprofit organization; even if the film is shown on a closed-circuit system; even if the location is not open to the general public; and even if the facility is rented to another group.

While it is not surprising that the MPLC takes a very broad view of when a license is needed, there appears to be judicial support for generous construction. In a case involving a video store that rented small booths to its patrons to watch privately films they had rented, a Court found infringement of the plaintiffs’ copyright (Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F. 2d 154, 159 (3rd Cir. 1984)). The fact that the booths were small and private did not “mitigate the essential fact” that the store was open to the public.

The conclusion is inescapable: It is risky not to pay these fees for several reasons:

  • The Copyright Office does not maintain a list of songs or movies in the public domain, for which no fees would be required.
  • If their past conduct is any indication, some of these licensing groups, especially ASCAP, seem willing to go the distance. One commentator has described an attempt by ASCAP to make groups, such as the Girl Scouts of America, pay licensing fees to sing its songs (See generally, “When in Doubt, Do Without:  Licensing Public Performances by Nonprofit Camping or Volunteer Service Organizations Under Federal Copyright Law, 75 Wash. U. L. Q. 1277, 1278, n. 2 (1997)).  ASCAP ultimately backed away from this position but is clearly tenacious and insistent about enforcing its rights.
  • The penalties for non-compliance are high. These include injunctive relief, damages, and attorney’s fees. Instead of actual damages, which may be difficult to prove, the copyright owner may opt to recover so-called “statutory damages,” which can range from $750 to $30,000.

To put this in perspective, while the licensing fees may seem perplexing and unreasonable, in light of the current state of the law and the risks of noncompliance, the prudent approach is to pay them. That way, you will not be subject to any unpleasant surprises and uncontrolled costs, and you are far less likely to end up singing the blues.

When it comes to licensing fees, it’s better to seek legal counsel before it’s too late. To avoid headaches caused by music, videos, etc., please feel free to contact us here!