SLO coffee shop facing legal pressure from music industry

December 19, 2012

Two music-licensing firms with clients ranging from Lady Gaga to Jay-Z have taken interest in acts performed by amateurs at a San Luis Obispo coffee lounge — which has put an end to “open mic night.”

Representatives of Broadcast Music Inc. (BMI) and the Association of Composers, Authors and Publishers (ASCAP) say that Kreuzberg, CA is illegally allowing performers to incorporate copyrighted songs into their acts at the downtown San Luis Obispo coffee shop and café. Both firms, which collect license fees and distribute royalties to their clients, have contacted Kreuzberg and have ordered the large coffee shop to purchase music licenses or discontinue allowing copyrighted material in performances.

Kreuzberg owner James Whitaker said he is well aware of the copyright infringement complaints.

“I’m getting letters from BMI attorneys like twice a week, and we’re getting called everyday,” Whitaker said.

Whitaker said he has suspended Kreuzberg’s weekly “open mic night,” the primary target of the copyright complaints, and that he would decide in the next week on how the business will handle the demands of the licensing agencies.

But, the Kreuzberg owner indicated that he would most likely not purchase the music licenses and opt instead to prohibit the performance of licensed songs at all events in his coffee house. Whitaker said that BMI is asking for a “huge, exorbitant fee.”

“We’re a small local business, not a big corporation,” Whitaker said. “We can’t afford to do that.”

Whitaker said Kreuzberg is being targeted because of the large square footage of the Higuera Street shop.

“We are like the biggest coffee shop ever.”

BMI spokesman Blair Keso confirmed that the size of a venue factors into the rate of a licensing fee and that Kreuzberg would have to pay a steep price for a coffee shop.

“The size of the place would require a very large licensing fee for a very small business,” Keso said.

Whitaker said he must look out for the survival of the business, even if it comes at the cost of open mic night.

“I’m a huge fan of local music. I’m a huge fan of open mic night,” Whitaker said. “I need to look out for the survival of the restaurant over one event once a week.”

Neither Keso, nor other BMI spokespeople disclosed the figure that the firm planned to charge Kreuzberg. However, an ASCAP spokesman told CalCoastNews the exact price his organization planned to charge Kreuzberg for an annual music license.

“They have a seating capacity of 50, and it would be $336,” ASCAP spokesman Vincent Candilora said.

Candilora added that Kreuzberg could purchase a discounted annual license at $304.02 if it the business chose to pay in full. The license would cover each of the approximately 8.5 million songs ASCAP licenses.

The ASCAP spokesman did not indicate, though, which copyrighted songs performed at Kreuzberg belong to clients of his firm. Neither did BMI spokespeople.

While the ASCAP license fee may cost significantly less than BMI’s rate, allowing the performance of songs licensed by ASCAP, but not by BMI, could prove troublesome. ASCAP claims to handle the licensing of about 1 million more songs than BMI. But, BMI still claims to represent clients with the combined rights to more than 7.5 million songs.

Both BMI and ASCAP have contacted Kreuzberg many times in regard to copyright infringement. Keso said BMI issued a cease and desist order to Kreuzberg, which the company says it does only after making numerous phone calls and sending letters and marketing material. Candilora said ASCAP representatives have emailed Kreuzberg and spoken with Whitaker on his cell phone. An ASCAP licensing manager also left a card inside Kreuzberg in March, Candilora said.

Candilora described the work of ASCAP licensing managers as similar to marketers who generate leads and produce sales. He said ASCAP sales representatives often approach new businesses that open in their areas. Kreuzberg, which has only been in business for two years, opened at its current location a little more than a year ago.

While BMI and ASCAP each seem to want to woo Kreuzeberg into becoming a licensee, they do pose legal threats to the coffee house. Candilora said ASCAP sues about 250 to 300 copyright violators each year.

“We only take legal action as a very, very last resort,” Candilora said. “It’s not in the best interest of our members to be suing people.”

BMI issued a similar statement pertaining to their encounter with Kreuzberg.

“BMI would prefer to educate, not litigate, and most times we are successful in this effort when business owners understand that music is a songwriter’s property.”

Both BMI and ASCAP supported the controversial Stop Online Piracy Act (SOPA) introduced in the U.S. House of Representative in October 2011. If passed, SOPA would require Internet service providers to block access to websites containing material infringing on copyrights.