Dance and Exercise Studios Paying the Piper : BMI and ASCAP target businesses to collect music licensing fees under little-known copyright law

When Ellen Cavalli opened her small dance studio a few years ago in Santa Monica, she didn’t pay much attention to the letters she began receiving from the American Society for Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI).

The wording in each letter was different, but the message was the same: In order for her to use recorded music in her new Studio West Dance and Exercise, she must comply with U.S. copyright law by agreeing to pay a yearly fee--based mainly on number of students--to both ASCAP and BMI.

“To tell you the truth, I’ve never totally understood it,” Cavalli said. “For about the first year everything about starting a business was a burden to me and I didn’t pay because it didn’t seem right. I didn’t understand why I had to pay to use my own records and tapes. But I was getting letters with threats of going to court so finally, rather than deal with the harassment, I paid the license fee to both of them. . . .”

Cavalli is one of thousands of people nationwide who are receiving demand letters, phone calls and visits from representatives of ASCAP and BMI, the two major American non-profit performing rights organizations that represent composers, songwriters and publishers.

BMI and ASCAP executives insist they are only trying to collect what is due their members under music copyright law. Wherever copyrighted music is played--on radio and TV, in theaters, in restaurants, bars, banks, shopping malls--a use fee must be paid under terms of the law, which was enacted in 1909 to protect the financial interests of songwriters and composers. BMI and ASCAP collect the fees and disburse payments periodically to their members.

Lamont Dozier, songwriter for such ‘60s Motown stars as the Supremes, the Four Tops and Marvin Gaye, says simply: “Without BMI, the songwriters like myself wouldn’t have a voice. . . . We need to get paid for our work as well as anybody else. We have a business to run, too, and that business is music.”

But despite massive educational efforts by BMI and ASCAP, there is increasing anger and confusion among the dance and exercise studio owners nationwide. They’re angry because they think the purchase of the recordings makes the fee unnecessary--not realizing that under copyright law ownership of the physical recording does not give them the right to play the material on it for further profit. They’re confused about the complicated calculations to set fees and why they must pay two different organizations for what they see as the same product. Because specific payments BMI and ASCAP make to composers and songwriters are not made public, the dance and exercise studio owners are questioning if the fees actually reach the artists. And they’re resentful that the dance and exercise studios--along with other businesses that are major users of music--are the targets of a “focused marketing campaign” for collection of the fees.

They also fear the power of these two groups, citing intimidation tactics.

Patsy Swayze, Patrick’s mother and owner of Swayze’s Dancer’s Studio in Simi Valley, says she started paying ASCAP recently “because they were coming down so heavy on me. Every month telephone calls, letters, threatening type things.”

Henry Siegel of Voight Fitness and Dance Center in West Hollywood says: “We’ve been aware of people from ASCAP and BMI attempting to strong-arm business owners. They come in with a very aggressive and intimidating attitude. It’s been done to me. I pay both of them and it’s a nuisance fee.”

Sharon Sockalosky, executive secretary for 105-year-old Dance Masters of America, a dance teachers’ organization, says she’s been hearing reports of BMI and ASCAP intimidation from members of her organization.

“I’m getting stories from all over the country--at least 100 in the past year--that either BMI or ASCAP representatives are coming to studios unannounced, during off hours, when the owner is alone,” she said. “It’s generally two large men and to these women they seem very aggressive or frightening.”

Responding to Sockalosky’s allegations, Tad Maloney, regional director of BMI’s licensing department, says: “That sounds like ASCAP, not BMI. We do most of our work by mail and there is definitely no double-teaming. If I catch my guys intimidating like that they’re looking for another job. That’s not the way we work.”

“I wouldn’t say that any of our people are intimidators, and seldom, if ever, do they work in pairs--we don’t have the resources for that,” says Kenneth Gilman, ASCAP’s director of general licensing. “We only have 135 representatives in the U.S. Our people try to visit during normal business hours, but since they don’t want to walk in on a dance class because the instructor would be busy, they try to pick a time when the instructor is not giving a class and often will ask first when is the best time.

“We do attempt to make in-person contacts, the purpose being education, certainly not intimidation. People think music is for free, so when someone comes and tells them they need to pay money for this, and they’ve never heard about it, they feel they’re intimidators. They look upon it as harassment.”

Swayze remains unconvinced: “I just wish someone would investigate both ASCAP and BMI. . . . I’d like to know who’s getting that money. Are the musicians being paid a royalty or does this just go to the company that’s publishing and producing it? If I felt that a starving songwriter or composer was getting this money I’d feel better about it, but I feel like we ought to have some accounting if we’re going to have to pay this money, about who’s getting it and how much.”

“It’s the unknown law,” said Thomas Annastas, BMI’s vice president for general licensing, “and you always hear, ‘What kind of scam is this?’ One of our biggest problems is educating the public about it. It’s been in effect for 75 years but people don’t know about it because no one’s taken the time to explain it to them.”

While owners of other businesses where copyrighted music is played are also required to sign licensing agreements, it is the dance and exercise studio owners who are the current targets of what BMI vice president for corporate relations Robbin Ahrold calls “a focused marketing campaign to license ‘primary music users’: businesses which use music at the core of what they offer to the public.”

Although observance of the copyright law is compulsory, Ahrold points out that studio owners could “stop using music if they don’t intend to pay or they may arrange compensation with individual songwriters. Most choose the simplest of those ways: a blanket license (fee).”

The words “reasonable fee” and “commerce” are emotional sticking points for dance and exercise studio owners who argue that while composers and songwriters are entitled to compensation, fee schedules are arbitrarily devised. Studio owners say they sell instruction, not music, and they’re actually promoting the music by playing it.

Mark Lawrence, owner of City Dance in Los Angeles, expresses a common anger and frustration when he says: “I certainly don’t have anything against ASCAP or BMI, but I think it’s a hazy law and subject to different types of interpretation. They’re getting so much exposure from the records I play, they should pay me to play the records.

“With dance studios like mine, there’s no profit--I just about make it and it’s not easy. I need music to teach my dance classes, but I don’t capitalize on the records. To put another tax on top of a tax, especially for someone who probably spends close to $2,100 a year on music, I find to be unconscionable, and if it comes to that, I’d be willing to use piano and congas, or just clap.”

Technically, the license fees are not a tax. Kathie Davis, executive director for the 12,000-member International Dance and Exercise Assn., says: “Music licensing is the law and that’s the stand we take as an association. . . . Everyone has an opinion about licensing and they’re not thrilled, but there’s not much choice.”

In response to “double” record royalties, upon purchase and through license fees, Ahrold says: “The songwriter receives a mechanical royalty for each record but the bulk of his income is secured when his material is used in what is called public performance: on a radio or TV broadcast or in a public location.”

According to Annastas, BMI issues several kinds of licensing agreements, depending on types of businesses, which are based on information given by trade organization representatives. For instance, Ahrold says the fee for shopping malls may be based on gross leasable footage. The fee range for dance studios, Annastas says, is based on four categories: number of students, instructional music usage, background and instructional music usage and number of floors in the building. Within these categories the current BMI fee range is from $82 to $870.

The ASCAP license agreement for dance schools lists just two factors: type of dance instruction and average number of students per week, with fees ranging from $34.07 to $272.50.

Michael Greenwald, co-owner of Mezzeplex exercise studio in West Los Angeles, says, “I think there should be some appropriate payment to the artist, but it has to be fair and ethical, based on usage and not gross. If they’re going to charge for the amount of time that music is played, fine; but if they’re tying it into gross or size of buildings, that seems irrelevant to me.”

Voight Center’s Siegel says: “The formula by which they determine the fee for use is conceptually inequitable, plus with the blanket fee you’re paying for music you may not need, so the artist is actually receiving additional revenues.”

Both ASCAP and BMI are prepared to sue to uphold the law protecting their members, although they consider litigation their last resort. The licensing procedure outlined by Gilman is fairly similar for both organizations, with initial contact made by mail, phone or in-person visits with each dance/exercise studio. After the law is explained and questions answered by marketing personnel, license compliance is requested.

ASCAP and BMI field representatives carry out the “front line” contact work, which BMI regional director Tad Maloney describes as “a strange job. We’re selling an intangible product that people assume they already have because they’re using it. The truth is that someone else owns it and we have to explain that to them.

“Often a small business is most resistant to licensing. They feel it’s a racket, they have limited exposure to the copyright law and they’re more difficult sometimes to educate. We have an ongoing training situation here and when I interview people for work I look at how well they can handle stress and if they communicate clearly. The guys who work here are very skilled in working with impatient or angry people.”

According to BMI’s Ahrold, most businesses, perhaps as many as 99% of them, undertake their responsibilities and take “appropriate action. After maybe a year of contact, we’ll send a cease-and-desist order to those businesses, telling them to stop using BMI music. If they continue to play it we’ll enter a lawsuit against them, but that’s maybe 600-700 out of many tens of thousands, a tiny fraction of 1% of all the businesses we contact. Of those maybe 650 lawsuits, 640 are settled out of court and only a handful go to trial.”

Gilman says, “There may be 750-1,000 lawsuits on behalf of ASCAP members filed per year in the U.S. but that’s the last step in a long procedure of licensing attempts.”

Many dance and exercise studio owners resent the BMI and ASCAP presumption that copyrighted material is being used. They say that ASCAP and BMI have arbitrarily compiled a “play list” of music for which they must pay, whether they use it or not.

Ahrold explains the BMI method: “We have a comprehensive logging system which determines what music is being used across the country. The primary mechanism is the music that’s played on radio and television.”

Ahrold says that 10,000 radio stations are sampled and using a combination of TV guide listings and cue sheets made up by the TV industry, BMI can tell what music is used and who the composers are.

“All that goes to a massive computer data base here and is the core information used to determine whose music is being used and how much each of our 60,000 members is due each quarter,” Ahrold says. “In general, using spot checks and common sense, the material you hear on a cross section of American radio is the material you hear in dance/exercise locations, in rough proportions.”

As to why there are two organizations collecting rights payments, BMI’s Maloney explained that his organization was formed in 1940 to meet the conditions of a consent decree issued as a result of a lawsuit brought by radio broadcasters against ASCAP. He said: “Publishers can have both an ASCAP and BMI publishing house, but writers can only belong to one organization at a time, although some choose to leave one group for another and vice versa.”

Ahrold says that “industry trade publications . . . last year printed that our gross income on everything was about $250 million.”

As for studio owners’ voiced suspicions about fee collection monitoring, both Gilman and Annastas point out that ASCAP and BMI operate under a consent decree, which means, as Annastas says, “Everything we do is scrutinized by the Justice Department and has to be approved by them.”

Sharon Sockalosky has some clear advice for members of her dance organization: “They have to pay the fees, it’s a federal law, but they shouldn’t open their home or business doors. Even so, a lot of our people are discarding any recordings that have BMI or ASCAP labels. . . .”

Bypassing ASCAP and BMI music is one way to deal with copyright compliance. But those who want to keep using recorded music have, at this point, no legal option. Meanwhile, resentment in the dance and exercise studios continues and the licensing “educators,” ASCAP and BMI, seem to have their hands full as they try to make known “the unknown law.”