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VOL. 123 | NO. 49 | Tuesday, March 11, 2008

Newby's Owner Weathers BMI Suit

By Andy Meek

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For the most part, the last few years have been good to Todd Adams, the owner of a popular college bar along the Highland Strip.

Newby's, the bar he bought in 1997, is sometimes referred to by its owner and customers as "the college bar you never graduate from."

That's a spirit he's tried to maintain and cultivate at the University of Memphis area hotspot, and it's partly the reason he's now fighting a group of lawyers and music industry executives who filed a federal lawsuit last year against Newby's.

He's also fighting to keep his business afloat, even though the toll from the
lawsuit has led him to consider filing bankruptcy.

'Really sad affair'

Broadcast Music Inc. (BMI), a nonprofit group that licenses the music of songwriters and publishers, brought the suit against Adams in federal court.

Any business where music is played or performed, such as a restaurant, hotel or airport lounge, is required to buy a license from a group such as BMI. For an annual fee, the license gives those businesses the performing rights to the 6.5 million songs in the BMI catalog.

Newby's owned a BMI license several years ago but doesn't anymore. For more than a decade, Adams has maintained that the music industry group changed the terms of his license agreement after he thought it was already finalized.

Among the factors that determine a business' yearly license fee is its capacity. Adams said Newby's legal occupancy is 132, but he says BMI records peg that number at 600.

The answer given by a BMI representative when asked the reason for that discrepancy is that disagreements over occupancy are common between business owners and BMI.

Newby's currently employs fewer than 20 people, and Adams scrapes to pay the bills. But he said BMI, which has a branch office in the 10 Music Square East building on Nashville's famed Music Row, has steadfastly refused to negotiate with him.

"I've been trying to come up with a reasonable payment for them - I've been doing that since day one," Adams said. "They have never wanted to do anything at all except sue me and make tens of thousands of dollars. It's just a really, really sad affair."

What it amounts to

For Adams, that situation doesn't appear to get any better. The lawsuit doesn't mention a specific amount of money the music group is seeking.

But Jerry Bailey, director of media relations for BMI, said there is a statutory range BMI can request for in damages, which can reach as high as $30,000 per song.

If the infringement is determined to be willful, the costs could get up to $150,000 per song. In Newby's case, court documents on file in U.S. District Court for the Western District of Tennessee record 21 instances of copyright infringement.

"Generally, BMI doesn't ask for damages at that willful infringement level," Bailey said. "One reason is that damages at that level would definitely put most businesses out of business if there are multiple songs involved, and it's never been our intention to put anyone out of business. We simply want to license them.

"If they've caused us significant legal costs and there are lost revenues involved, then we always ask for enough to recover our damages, in addition to court costs and legal fees. That's what it really amounts to."

Formidable foe

That formula for damages, though, should be viewed in the context of another facet of BMI's operation - its near-perfect batting average. Bailey could not recall offhand a similar copyright infringement lawsuit the group has lost.

An entire floor in the BMI building in Nashville is occupied by a bank of computers performing research that's part of the process of tracking unlicensed businesses such as Newby's. The group has several tactics it uses to build a case against an offending business, such as sending an anonymous researcher on-site to collect evidence.

Those researchers show up and order from the menu, hang out, socialize - all while secretly recording the details of who exactly is playing which copyrighted songs.

That's what happened in Newby's case. A BMI researcher was in the crowd on New Year's Eve in 2006 noting that the audience was listening to performances of songs such as "Get Down Tonight" by K.C. and the Sunshine Band.

"Better than 90 percent of these cases get settled before they go to trial," Bailey said. "If they go to trial, it can be extremely expensive for a business owner should they lose."

The business owner might be on the losing end in that scenario, but so would another party. Adams said his bar's performance space fills an important need for young bands just starting out, some of which may be in the process of distributing their music and trying to get their first radio play.

Newby's also stands apart from other Memphis venues such as TJ Mulligan's, where he said it's more common to hear bands whose set lists are comprised almost exclusively of cover material.

"What has Newby's done except offer a great place for artists to play in Memphis?" Adams said. "Ninety-nine percent of the artists here play their own music. Sure, maybe half a dozen times a year someone will play a cover song. But are you kidding me? You're going to charge me $12,000 or something a year for that?"

Personally and professionally, Adams ought to be a happy and comfortable man. His business remains a popular concert venue for up-and-coming bands more than a decade after he first took it over. It sits at the heart of the neighborhood surrounding the University of Memphis, an area that's the focus of a broad revitalization effort.

Adams and his wife, Stephanie, a nurse, got married four years ago. The protracted court fight, however, has taken a toll on the bar owner.

"We're good people over here," he said. "We're not selling to minors, breaking the law. I'm just trying to make it through another year, hopefully until this university district gets developed. And then it's going to explode over here and just be amazing."


PROPERTY SALES 41 308 2,265
MORTGAGES 47 379 2,607
BUILDING PERMITS 128 1,018 6,068
BANKRUPTCIES 53 255 1,787