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FBI, Recording Assn. Expand Probe Of CD Jukebox Market

Posted On: 2/16/2005

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FBI, Recording Assn. Expand Probe Of CD Jukebox Market

NASHVILLE, TN - The Federal Bureau of Investigation is working with the Recording Industry Association of America to investigate illegal burning of CDs by jukebox operators, according to Mike Vaughan, director of the Jukebox License Office. According to Vaughan: "We recently got a call from an FBI agent investigating burned CDs on jukeboxes in the Southeast. My understanding is they were working, or [at least] in communication with, the RIAA."

Vaughan added: "We also got a call from a freelance investigator from the RIAA, formerly with ASCAP [American Society of Composers Authors and Publishers], who said that the RIAA has teams out there investigating reports [of jukeboxes with illegally burned CDs] that are left on their tip line."

RIAA's piracy hotline phone number is (800) BAD-BEAT. Vaughan said the organization offers a reward to anyone whose tip leads to successful prosecution.

Some members of the Amusement and Music Operators Association and music one-stop owners have described CD burning by operators as an "epidemic." A statement to this effect was made at one industry-sponsored public forum as early as 2003, during the AMOA Council of Affiliated States. Making copies of compact discs for public performance, such as jukebox play, without permission of the intellectual property owners, publishers and licensors is a violation of the U.S. Copyright Act.

The JLO's cooperation with the FBI was restricted to providing a general explanation of the jukebox industry's structure, Vaughan said. Beyond that, "We advised that we would need a subpoena before we provided specific information. Across the board, we do not give information about our licensees, even in a situation like that, without a subpoena. And, I don't think there is anything we have that could help them in an investigation of that type."

The JLO administers jukebox music performance licenses for the U.S. CD jukebox market. The JLO reports to the three Performing Rights Organizations: the ASCAP; Broadcast Music Inc.; and SESAC.

According to Vaughan, illegally burned CDs are not the only legal and technology issue facing today's jukebox industry. At a fall, 2004 meeting of the New York operator association, AMOA-NY, Vaughan was advised that some location employees have begun plugging their iPod music devices into the sound system of the jukebox, or the location, and playing music for customers' entertainment. This practice not only competes with jukeboxes and risks reducing jukebox income, it also improperly uses operator-owned equipment without permission. And, it violates U.S. Copyright Law.

"I have been very surprised what a problem this has been for operators in New York," Vaughan admitted. "I am sure that PROs are very interested, but I encourage operators to bring these concerns to RIAA as well since it is definitely a recording industry issue. I gave RIAA contract information to New York AMOA leader Ken Goldberg so they could discuss the problem with the RIAA's attorney Carlos Linares." Vaughan said the JLO would forward the information to the RIAA if operators are reluctant to do so, but he assures operators that RIAA is "very tight lipped."

The proliferation of new technologies has created some confusion in the market about which entities bear legal responsibilities for which aspects of copyright obligation.

"Operators are responsible for the jukebox," said Vaughan. "Location owners are responsible for everything else , whether it's radio, CDs behind the bar, disc jockeys, karaoke, and so on. The only reason the jukebox operators become responsible for jukebox play is because they are the ones taking the money out of the machine. People do come up with gray areas that we've never heard before. But if someone plugs a microphone into a jukebox and sings along, that does not obligate the operator to get another license. On the other hand, if someone brings in a full karaoke setup with screens and so on, it must be separately licensed by the location even if it broadcasts through the jukebox speaker system."


Despite this relatively simple assignment of responsibilities, Vaughan said, much confusion remains on the subject, not only among operators but even more so among locations. Notices to locations trigger location actions and requests that reflect this confusion, he added.

"Sometimes ASCAP, BMI and SESAC notify a location about something and the location thinks the operator is responsible," Vaughan explained. "In 99% of the calls we get about such notices, the location needs to pay for it. I like the fact that locations come to operators because then operators can call us, and we can get hold of somebody at the PROs and provide the real answers very easily to operators.

"This, in turn," he continued, "helps the operator provide better service to locations. So we encourage operators to call with questions like this or on any subject. Sometimes we get calls about questions like burning CDs, and we have to caution that this lies outside the scope of what the JLO and PROs do, but we can still give them a pretty good understanding of the situation."

In 2004, JLO licensed between 75,000 and 80,000 jukeboxes. "We'll continue to see some drops in our numbers through the advent of digital jukeboxes," Vaughan said. "Even though they are licensed, it is not done through this office."

The JLO licensing figures also fluctuate each year because some licenses are paid late for various reasons, Vaughan pointed out. "We lose a certain number of jukeboxes every year, some through attrition and some due to the consolidation of the bar and restaurant industry. Some jukeboxes are not licensed again every year, and the PROs see those disappearing locations in their licensing profile as well. But we know there are some folks who do not license all their jukeboxes every year. Keeping track of that is one of our major tasks; we remind operators that when a jukebox is sold, their licensing agreement calls for them to notify us of the purchases so we can keep track. If we can provide the PROs with a snapshot of locations that closed, it's good for them to see that."

VT reported the new 2005 license fee structure for jukebox licensing in our January issue. Readers may contact the JLO at tel. (800) 955-5853 for details on how to comply with copyright requirements.