Music licensing — I already paid for the machine. Why pay again?

What we hear most often from noraebang owners is, "I paid for the machine and I pay the update fee too." That frustration is understandable. You did pay that money. It went to different recipients, though. The machine price was paid to the company that made the karaoke machine, and the song-update fee to the vendor that loads the new songs. Permission to use those songs in your business, in front of customers, belongs to the composers and lyricists who wrote them, and the price of that permission is the public performance fee.

What the law provides

1. Playing songs and letting customers sing them at a place of business is a "public performance." That right belongs to the person who created the song (U.S. Copyright Act, 17 U.S.C. §106(4), §101).
2. There are decisions holding that the same applies to partitioned private rooms. Decisions of the Third Circuit Court of Appeals (Redd Horne 1984, Aveco 1986) hold that if the establishment is one anyone can pay to enter, a performance inside a room is also a public performance, and the U.S. District Court for the Southern District of New York reached the same conclusion in a noraebang case. There is also a Ninth Circuit Court of Appeals decision (1989) holding that a hotel guest room is a private space, but that decision concerns a hotel whose main business is lodging.
3. Buying an object and having the right to use the songs are separate matters. The law treats ownership of a copy and ownership of the copyright separately (§202). Check for yourself whether your machine or subscription contract states that it grants permission for performance at a place of business in the United States.
4. Korean songs are protected in the United States in the same way. Korea (in force August 21, 1996) and the United States (in force March 1, 1989) are both parties to the Berne Convention (§104).
5. The person who needs permission is the business owner. The standard courts apply is that responsibility lies not with customers or employees but with the person who has the authority to supervise the establishment and who profits from its operation. There is also a decision holding the individual owner behind a corporation liable (BMI v. Meadowlake, 6th Cir. 2014).
6. Use without permission can give rise to civil liability for damages. For a song registered with the U.S. Copyright Office before the infringement, a court may set statutory damages in the range of $750 to $30,000 per song, and if willfulness is found the upper limit is $150,000 (§504(c), §412). For a song that is not registered, only actual damages can be claimed. In publicly reported venue cases, the amounts awarded have often been in the range of a few thousand dollars per song.

Who you pay

• U.S. performing rights organizations (PROs) — The U.S. Copyright Office lists six, including ASCAP, BMI, SESAC and GMR. The Copyright Office explains that because each organization represents different writers and songs, licenses from more than one may be needed. Fees are set by occupancy, the type of music and how often it is used, so get a quote from each organization.
• Rights holders of Korean songs — For songs by Korean writers, the point of contact depends on where the rights have been entrusted. ELOHIM EPF USA contracts with music publishers in Korea and administers the rights in those songs in the United States and Canada. You can look up for yourself which songs ELOHIM EPF USA administers in the list of administered songs.
• What a PRO license covers — A PRO's blanket license includes only the right to perform that organization's songs. Other rights, such as displaying lyrics on a screen, are handled separately.

Common misunderstandings

Three things to ask for when you receive a claim

Whoever is making the claim, including ELOHIM EPF USA, ask for the following in writing.

1. A list of the songs they administer.
2. The basis of their rights. The chain of contracts running from the writer to the publisher to the claimant, and the U.S. Copyright Office registration numbers, if any.
3. The types of rights the permission includes, its term, and how the amount is calculated.

Keep all the license agreements and receipts you receive, the purchase receipt and update contract for your karaoke machines, and the letters exchanged. You will also need these documents when you sell the business.

How much to put in the budget

The amount is not large if you know it before you start. The fee for songs administered by ELOHIM EPF USA is $30 per room per month for venues that do not sell alcohol. With ten rooms, that is $300 a month, or $3,600 a year. For venues that sell alcohol, we provide the amount individually according to the type and size of the business. Enter the fees of the U.S. performing rights organizations in the same table, using each organization's quote. If you put it in as one line under rent and insurance in your opening budget, it becomes a fixed cost you do not need to think about separately after you open.

Those songs are the reason customers come back saying, "This place has all the old songs." Please think of the fee as the share that goes back to the people who brought regulars to your venue.

See the rate basis and registration process →