U.S. Copyright Act's Public Performance Exception Costs Composers More Than $150 Million: Study
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The part of the U.S. Copyright Act that exempts some small restaurants and bars from paying public performance fees to collecting societies could be costing rightsholders more than $150 million a year, according to a study by the consultancy PMP Conseil.

The study was presented today (Nov. 8) by Keith Donald, chairman of the Irish Collecting Society IMRO, at a meeting of the International Council of Creators of Music. The research was funded by GESAC, the organization of European composers groups, in an effort to push the U.S. to change its copyright laws.

The issue stems from 1998, when Congress passed the Fairness in Music Licensing Act, which let more bars and restaurants play music on a stereo or television without getting public performance licenses from ASCAP or BMI. (The bill was attached to the Copyright Term Extension Act.) Although more sweeping exemptions in the original text of the bill were withdrawn, the final version allows restaurants and bars of less than 3,750 square feet to play music without a license, provided they meet certain conditions. 

After the law took effect, the European Commission began a dispute proceeding against the U.S. at the World Trade Organization, on the grounds that the exemption violated the Berne Convention -- which the U.S. is obligated to abide by under the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). The WTO ruled in favor of the Commission, and in 2003 and 2004, under the terms of a settlement, the U.S. paid into a European Union fund to benefit songwriters. But it hasn’t paid since then. 

“What the creative community in Europe would like is for the U.S. government to close the loophole in current copyright law,” says IMRO chief executive Victor Finn. 

PMP Conseil’s research shows that European rights-holders lose $44 million a year from these exemptions, while U.S. rights-holders lose $109 million a year. GESAC funded the research to back up its case that the exemption is unfair with current statistics. It seems unlikely that U.S. publishers or collecting societies have the leverage in Washington DC to change this part of copyright law -- or perhaps even the will to try at a time when the rapidly evolving streaming music business presents so many new challenges. But at a time when copyright comes under so much criticism from licensees, it could be important for international rightsholders not to allow a country to ignore its obligations under the Berne Convention without a challenge.