When Irish Eyes Are Smiling

Irish music is a pervasive cultural force in the United States. Of course, one can quantify the sales of albums by popular musicians such as U2 (which has sold 10 million copies of its latest recording) or the Corrs (who sold one million copies of their last CD). Then, add in all the traditional Irish music played in the numerous Irish bars in the United States. That’s a lot of music — and a lot of money too.

Back in 1997, the Irish Music Rights Organisation (IMRO) noticed that something smelled funny in this cultural exchange. Ireland’s musicians were exporting a lot of music, but the royalties they imported from the United States were not what one would expect from the amount of Irish music sold and played on radios and television in the mighty US of A.

On behalf of Irish musicians, the IMRO decided to do something about it. So they went to the EU Commission — which took note of the mournful Irish tune on music royalties. In 1999, the EU took the case to the WTO.

The Europeans argued that an exemption from U.S. copyright law for some U.S. bars and restaurants was cheating the continent’s musicians of millions of dollars in royalties.

Usually, under U.S. copyright law, any “public performance” of a song requires the payment of a royalty to that song’s owner. But an odd U.S. copyright escape hatch — dubbed the “Aiken exemption” — came about in 1975 as a result of a uniquely American copyright tussle.

The two U.S. organizations that have long collected royalties on behalf of musicians and copyright holders — BMI and ASCAP — once targeted all public spaces in the U.S. that played music to make payments to its members.

But 26 years ago, when a U.S. copyright holder sued a small Pittsburgh chicken restaurant for copyright infringement, a loophole emerged. The defendant, restaurateur George Aiken, played music from a radio in his small dining establishment.

Eventually, however, Aiken won the case in the U.S. Supreme Court. Thus, an exemption for smaller establishments from the “public performance” section of U.S. copyright law was born.

However, as time progressed, the scope of the Aiken exemption grew larger and larger. Twenty years late, in 1995, BMI and ASCAP struck a bargain with lobbyists for the restaurant industry to exempt all establishments under 3,500 feet in size (or 1067 meters) and with less than three TVs or radios from paying royalties collected.

Many U.S. restaurant and tavern owners found ingenious ways to squeeze their establishments under that bar set by the agreement, such as switching the compact disc players and turntables that they had installed in their bars to radios and television, or enlarging their dining spaces — where no music was played — and shrinking the space of their bar areas.

The case is different in Europe. There, all public establishments — no matter what the size — are liable to pay copyright fees for music. An IMRO spokesperson told the newspaper Scotland on Sunday in 2000 that “U.S. copyright law does not give the same level of protection to European songwriters as we give to American songwriters.”

The WTO considered both the U.S. and the European positions on the matter. In July 2000, that organization’s Dispute Settlement Body ruled against the United States and its loophole for small restaurants and bars. The WTO gave the United States a year to abandon the Aiken exemption — and to find a way to compensate Irish and other European musicians.

More than a year later, the U.S. and the EU finally settled on a total of $3.3 million to remunerate Europe’s musicians. The United States also agreed to fix its copyright laws to reflect the agreement. The EU’s Trade Commissioner, Pascal Lamy, a feisty Frenchman always willing to battle hard for the bigger EU camp, joked that the agreement “will bring a smile to Irish eyes in particular.”

It will also make a sound as sweet as any made by Ireland’s talented singers and fiddlers as well — the ring of coins in musicians’ coffers.

March 17, 2002