Note: Just a reminder, I am not a lawyer and this is not legal advice. If you have specific questions regarding your circumstance, please consult an attorney.
It’s a story that we hear fairly often, ASCAP, BMI or another performing rights agency (PRO) files a lawsuit against bars, restaurants or other businesses that play music without a license. While these lawsuits are relatively rare, they grab headlines and get the attention of business owners.
This is one of the reasons that, when the topic of copyright comes up around me, one of the most common questions business owners have for me what they need to do to avoid getting sued for playing music in their establishment.
The answer really depends on your specific needs and what you actually want to play or perform. There are a lot of questions to ask yourself before choosing the path you want to take when licensing music for your business as it’s equally possible to both get a license that doesn’t adequately cover your activities and to pay for a license that you don’t really need.
So, with that in mind, here’s a quick primer in what you should be thinking about when looking to license music for your place of business.
A Quick Primer
With music, there are typically two separate sets of rights one has to worry about. The first is the composition, which covers everything about the song written on paper (notes, lyrics, etc.), and the second is the sound recording.
However, in the United States, the public performance right in the sound recording is limited to just songs streamed on the internet or via other digital means. As such, you typically only need to worry about obtaining a performance right for the song itself and that is typically handled through PROs.
To that end, there are four PROs to consider: ASCAP, BMI, SESAC and GMR. Each has its own catalog of songs they control, in whole or in part, and one solution is to simply obtain a license directly from each of the four, freeing you to play anything they license. With a license from all four, you can more or less play whatever you want and know that you are covered, at least in terms of the songs.
However, that may not be the best approach for many businesses as there are multiple alternatives that could work out both easier and cheaper without sacrificing legitimacy. It all depends on your business, the desired level of control over the music and what you’re trying to do.
5 Questions to Ask Yourself
Before decising on the approach you want to take, there are five questions you’ll want to ask yourself.
- Do I need music at all?
- How big is my business and how important is music to it?
- How much control do I want over my music and am I OK with commercials?
- Will I have live music or DJs?
- Do I want to earn revenue from music?
The reason to ask these questions is that you want to make sure that whatever approach you take both fully covers your activities and doesn’t result in unneeded hassles or costs. Right now, there are so many options that it’s important that you choose the right one.
Radio: No Cost but No Control
The first option for many is to simply not pay for a license and either avoid playing music, use only classical music or, more commonly, turn on the radio.
Under the law, you are allowed to play a terrestrial radio station in your place of business if your business is smaller than 2,000 square feet (3,750 square feet if you are an eating or drinking establishment). Larger businesses can also take advantage of this exemption if they have fewer than six speakers and no more than four in one room. There are also limits on the number of TVs larger businesses can have, namely no more than four TVs, no more than one TV per room and no TV having a diagonal screen size greater than 55 inches.
However, it’s important to note that this radio station or TV broadcast has to be an FCC-licensed broadcast. You can not use internet radio (Pandora, Spotify, etc.) and you will have no control over the music that’s played (other than being able to change stations). You will also have to deal with commercials, talking and other interruptions common on terrestrial radio.
Still, for many businesses, this is a viable option. However, it’s important to take special care that your business qualifies under the exemption and that you only use terrestrial radio/television sources. For most businesses, especially those where music is a key part of their experience, it’s likely worth upgrading.
B2B Solutions: Low Cost, Ease of Use and Limited Control
A major step up from just turning on the radio is taking advantage of one of several business-to-business music solutions.
Currently, there is a slew of companies that provide services to businesses to help them legally stream music for their employees and visitors. They typically range from $15-$40 per month and offer the ability to choose from a variety of playlists, tones and styles. They offer clean, commercial-free music that can better fit the tone of the environment and avoid repetition.
Many of these tools can go a step farther and help you segment your business, playing different music in different areas, and enable you to make announcements or offer promotions over the music system. However, for those that don’t wish to buy equipment, most offer the ability to stream over desktop computers or mobile devices, making new equipment unnecessary.
Examples of these services include (in no particular order): Cloudcover Music, SiriusXM For Business, Pandora for Business (powered by Mood:), Soundtrack Your Brand (formerly Spotify Business), CustomChannels and Rockbot to name a few.
These companies all handle the licensing of the music and provide a Pandora-like experience where you get music that fits the mood or genre you want, but you don’t have express control over each track played. This is great for businesses that don’t want granular control over their music but need to set the right tone or energy.
However, bear in mind the license only covers music performed through the service. Any music performed outside of it is not covered. This includes any live music or anything not played through this tool. Still, for many, this is likely the most cost and time-efficient solution.
Direct Licensing: Maximum Control, Higher Cost
If you want to have live music or have perfectly or have perfectly granular control on what is played, you’ll likely want to look at licensing songs directly from the PROs.
While this can be intimidating, the process is actually very simple. All you have to do is answer a few basic questions about your business including the type of business it is, the size of the business and the number of locations. From there, you simply pay an annual license fee can then play that PROs catalog.
Repeat this with all of the PROs and you should have pretty much blanket coverage for playing music in your business. You can obtain licenses by going to ASCAP, BMI, SESAC and GMR directly at these links. However, you would still need to be careful about where you stream music from as many services, such as Spotify, are solely for non-commercial use. Though the songs themselves would be licensed, there may be other legal issues.
Also, it’s worth noting that ASCAP and BMI have minimums for some business types and it would likely be cheaper to use a B2B solution. That said, if you want granular control or to have live music that features cover songs, you need to cover your bases with the PROs.
These licenses may be expensive, especially since they are renewed annually and not monthly, but they are much cheaper than litigation or even threats of litigation.
Internet Jukeboxes: A Different Approach
The idea is fairly straightforward, let the customers choose the music they want to hear and have them pay for the privilege. The jukebox provider handles the licensing of the music and this can generate a little bit of extra revenue for the business (Note: The revenue is usually split between the Jukebox provider, the local company that operates the jukebox and the venue.)
However, this once again takes a lot of control away from the business. Though they can often exclude songs or types of music, the customers are ultimately in control (it’s kind of the point). Likewise, these boxes only license the music played through them. Though some offer background music for when the jukebox isn’t active, you may need another commercially-licensed music service or risk having dead air.
Still, if you’re looking to turn music from a cost to a revenue earner, this is likely the best way to do it. Though you could have a traditional CD-based jukebox and pay your PRO licenses, this approach will likely be preferable to businesses that want to be more hands-off with their music.
When it comes to licensing music for your business, there are a lot of different approaches you can take. They range from just putting up a radio to licensing music directly from the PROs. What path you take depends on your needs and your desired level of control.
One thing to not do is go without a license. Though lawsuits are rare, that’s because the PROs are very aggressive with trying to resolve issues without going to court. In one recent lawsuit, BMI claimed that it approached a Miami bar more than 80 times before finally going to court.
For every lawsuit, there are hundreds, if not thousands, of businesses that were contacted by the PROs and the case wasn’t escalated to a legal case. It’s a headache that can be easily, and cheaply, avoided.
So take a moment and think about what the music needs of your business are how you can best meet them legally. You will come out ahead and artists will thank you.