What You Need to Know About Licensing Music for Your Business

If you own a business that relies on customers coming into your building—such as a bar, restaurant, retail establishment, or even professional practice with a waiting area—you probably have music playing at least sometimes. Maybe you have a radio that plays a particular local station for background music, or perhaps you use a streaming service like Spotify or Pandora to match the preferences of your customers more directly. If your business is a bar or a nightclub, your entertainment lineup might include live cover bands and karaoke.

Copyright laws in the United States generally apply to the public performance of music, which means that playing music in your place of business might require you to pay for the rights to do so. This area of the law, however, can be complicated, and it is important to work with a business lawyer who can help protect your best interests.

Licensing and PROs

In most cases, songwriters and performers can obtain federal copyright protection for their musical works. From a practical standpoint, it would be nearly impossible for licensees to buy performance rights from individual artists or writers. With this in mind, intermediary groups called Performing Rights Organizations (PROs) were created to streamline the process of licensing, as well as to facilitate enforcement efforts.

Almost all licensing of music performed in the U.S. is handled by one of just three PROs, and you might even recognize their acronyms and abbreviations: American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC. SESAC was originally founded as the Society of European Stage Authors and Composers, but the organization formally dropped the full name in favor of the acronym. A fourth PRO, Global Music Rights (GMR), joined the industry in 2013 and is gaining traction.

Bars, restaurants, and other entities that require music licensing will usually obtain blanket licenses from a PRO which gives the business permission to play all of the music under the purview of that PRO. The PRO then pays out the fees it collects to the artists in the form of royalties.

When Is Licensing Required?

Federal copyright laws apply to the public performance of music, which is defined as music in any format that is played “in a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” In a business setting, this could include playing CDs, using licensed music for telephone hold music, or having a radio loud enough for customers to hear.

If your company pays for a music subscription service—one that is designed for businesses—or has a vendor that operates a pay-for-play jukebox, for example, licensing fees are probably included in your contract. If you hire cover bands, however, or have an in-house DJ, you will likely need to obtain licensing on your own.

Licensing rules for businesses depend on the type and size of your business, the number of speakers and televisions in your business, and whether you have a cover charge for customers. For example, if you own a small retail space (less than 2,000 square feet) for your craft business, you would probably be exempt from the regular licensing guidelines. If you own a large bar with dozens of TVs and speakers, and you charge a cover on the weekends, you will almost certainly need the appropriate licenses.

Call One of Our Helpful Attorneys Today

If you have questions about protecting your business from fines and legal action related to broadcasting music, contact an experienced Hoffman Estates business law attorney. Call 630-756-1160 for a confidential consultation at the Gierach Law Firm today.

Sources:

National Restaurant Association

National Federation of Independent Business

Cornell Law School Legal Information Institute