Today’s diners expect more than just a meal. They demand a pleasing, memorable experience. The right music enhances a restaurant’s atmosphere, and according to a study by HUI Research, it has been proven to increase sales by as much as 9%.
This guide focuses on navigating the complex landscape of music licensing specifically for restaurants, ensuring your ambiance complies with legal standards.
Key Points
- You must have a license to legally play music in your restaurant.
- You can’t legally play music from a personal streaming service, like your personal Spotify or Apple Music account.
- If you have live music in your restaurant, such as a band playing or DJ spinning, you need appropriate music licenses.
- If you play music in your restaurant without a license, you could face steep fines.
- Commercial streaming services, like Pandora CloudCover allow you to legally play background music in your restaurant for a reasonable monthly fee.
Understanding the Legal Necessity of Music Licenses
If you want to play background music in your restaurant, you need the proper licenses. Playing music in a restaurant is considered a public performance, and if you are caught doing this without a license, you can face serious penalties, including substantial fines.
Playing music for a paying audience is considered a public performance of that music, which benefits your business. U.S. copyright law requires that restaurant owners pay for public performance licenses (PPL) from performing rights organizations (PROs) that control rights to a particular song.
Music license laws are governed by the U.S. Copyright Office. For each song played or performed without a license, federal damages and penalties start at a minimum of $750 and can range as high as $150,000 per song played.
In June 2016, BMI took legal action against a New Jersey restaurant and bar that resulted in BMI’s favor. The judge ordered the restaurant to pay $56,100 in damages, or $3,300 per song, plus associated legal fees.
In the long run, paying the extensive penalties for failing to legally license music for your business is much more expensive than the $2 average cost per day for licensing. Fortunately, more economical, easy solutions for music licenses are available for restaurant owners.
Can You Use Apps to Stream Music in a Restaurant
Many restaurant or bar owners think that purchasing music online means that you own a song. Unfortunately, this is not true.
The following three types of digital music purchases come with restrictions:
Digital Song Purchases
You do not acquire ownership rights when you buy songs or albums as digital content. You’re essentially paying for a license to access the song on demand via your devices. Although you have the right to privately listen to the song as much as you want, you cannot play it for a crowd, especially if you make money from your patrons.
Streaming Services
When you pay for a subscription to a music streaming service like Spotify, Pandora, or Apple Music, you pay for a license, not a copy of the song. This streaming service license covers individual or personal use of the music.
If you look carefully, the terms and conditions for these streaming services only include rights for non-commercial use of content.
Digital Radio Stations and Playlists
You can play all the songs you want at home but can’t share that perfectly crafted Spotify mix in your restaurant. You can't play Pandora stations at restaurants unless you use a specific business account.
These rules apply universally to personal music accounts, so it won’t do you good to look for alternatives to Apple Music or search for something to use instead of Pandora.
Every restaurant must obtain an appropriate music license to stream music publicly. Streaming your favorite playlist through your restaurant speakers without such a license is not legal.
Do You Need a License to Stream Music in Your Restaurant?
PROs collect digital, terrestrial (AM/FM radio), and live royalties for thousands of associated songwriters and publishers. They also monitor licensing compliance in businesses throughout the United States and Canada by sending special representatives to visit restaurants to determine if the songs played publicly have been licensed.
If your restaurant plays music that has not been appropriately licensed through a PRO, you’ll likely receive a phone call from them at one point or another.
These are the primary PROs.
If you’re looking for a diverse catalog with plenty of options, ASCAP and BMI could be good choices. However, if you want better customer service support, GMR and SESAC could be a good bet.
ASCAP
The American Society of Composers, Authors, and Publishers (ASCAP) is one of the oldest PROs in the United States, representing more than 850,000 creative professionals and a catalog of more than 18 million songs and scores.
ASCAP offers more than 100 types of rate schedules, allowing you to choose the version that is best for you and your business. Licensing typically involves outlining the size of your establishment and the music you’d like to play. Annual contracts ensure you’re always protected.
You can reach ASCAP via their website or by calling 1-800-95-ASCAP.
BMI
Broadcast Music, Inc. (BMI) was founded in 1939 by people interested in protecting blues, jazz, and country music. Since then, the company’s catalog has expanded, but teams typically focus on nurturing new talent and music forms.
BMI represents more than 1.3 million creators and more than 20.6 million musical works. With BMI, a contract’s cost is based on the type of establishment you own and the types of songs you’d like to play. When you apply for a license, a BMI representative is available to answer all questions and help you understand your purchase.
You can reach BMI via their website or by calling (212) 220-3000.
GMR
Global Music Rights (GMR) is one of the first new PROs introduced within the United States in almost 75 years. Since it’s been in existence for just 10 years, it has a relatively small roster. Just 83 artists and 63,000 songs are protected by GMR.
But some of the largest names in the music business are included, so it could be worth your time to sign a contract with them. GMR offers contracts based on the artists you want to play and the size of your establishment.
You can reach GMR via their website or by calling 1-844-827-5467.
SOCAN
The Society of Composers, Authors, and Music Publishers of Canada (SOCAN) is a Canadian PRO connected to more than 4 million creators across the globe. At one point, SOCAN only covered fees for public performances (like a CD playing in a store), but a 2018 purchase means SOCAN now administers rights for reproductions (like a record company producing a record of protected songs).
While SOCAN is a Canadian company, it administers rights for people living all around the globe. Even if you never intend to play music written by Canadians, you may need a relationship with SOCAN.
SOCAN uses an unusual fee structure, so it’s not always easy to understand how much you owe. An annual contract allows you to play songs from the entire SOCAN catalog.
You can reach SOCAN via their website or by calling 1-866-307-6226.
SESAC
The Society of European Stage Authors and Composers (SESAC) is one of the three largest American PROs. It’s one of the few for-profit PROs, meaning it can be aggressive about collecting fees for protected music.
SESAC recommends business owners contact the group directly about fees. The company writes contracts individually based on an organization’s goals, music use, and establishment size.
You can reach SESAC via their website or by calling 1-866-218-5823.
Comparison of PROs
This table comparing PROs can help you understand the basics of each organization and how they work. But in general, you must contact each group directly to find out how they can help.
Rates vary greatly according to the size of your business, the popularity of artists, the number of songs you want to play, and more. While these are some estimated costs, contact each PRO for specifics.
How Do I Get Music Licenses for My Restaurant?
Some business owners acquire licenses directly from each PRO. Music licensing fees for restaurants are typically charged annually.
Costs can range based on the following factors:
- The square footage of your restaurant
- Whether you offer live music or audio streaming only
- The frequency of playing music
A license with one particular performing rights organization only grants your restaurant a license for copyrights associated with that specific PRO. You may need additional permits to play music legally.
It is strongly recommended that restaurant owners pay licensing fees to all the PROs to play it safe and minimize legal risks. But this can become expensive and time-consuming as you negotiate multiple contracts for your restaurant with each PRO.
Blanket Licenses
Larger organizations often purchase annual blanket licenses with all the major PROs and several minor ones. If you run a small restaurant or café, you may not be able to afford this approach.
Commercial Music Options
Savvy operators are increasingly turning to business music solutions to streamline the process and cut down on music licensing costs. Best of all, these solutions manage the tedious licensing paperwork for you while you focus on running your restaurant.
One of the easiest ways to obtain licensed music for your restaurant is to work with a business music service. Access fully licensed music and ad-free playlists with one reasonable fee.
How Much Do Restaurant Music Licenses Cost?
Traditional PROs offer custom fees for restaurants based on the songs they want to play and the size of the establishment.
Let’s use BMI as an example. The company charges at least $378 per year — or about $31 per month. With that fee, you gain access to the songs protected by BMI’s license. You’d need to work with other PROs for full protection. If you work with two more, and they both charge about $30 monthly, you could pay $90 per month for licensed music.
Business music solutions like Pandora CloudCover charge as low as $17.95 (when prepaid annually) to $29.95 monthly for an entire catalog of music, complete with playlists, dayparting schedules, and custom audio advertisements.
Options to Pay for a Music License for a Restaurant
PROs like BMI and ASCAP offer several different types of payment options. In general, you can choose from one of two options:
- Monthly: You pay a set amount each month with the option not to renew for the next month.
- Yearly: You pay a smaller amount overall than you would if you chose a monthly fee. However, you are locked into a contract for an entire year.
Monthly contracts are a good option for restaurant owners who aren’t sure they’ll stay open for a year. You’ll pay more each month, but you’ll have the flexibility needed if your business changes or doesn’t succeed.
Yearly contracts are better options for restaurant owners who have a solid customer base and no impending closures. You’ll pay less and won’t have to worry over the hassle of renewing your contract every month.
Instead of paying licensing fees with a PRO, you could work with a licensing company like Pandora CloudCover. We’ve mentioned that PROs like BMI charge $31 per month. Pandora CloudCover charges just $16.95 per month when prepaid annually. With that fee, you have access to a large library of music, and playing that music within the app (paid for with your subscription) means you’ll always play songs with permission.
License Requirements for Large vs. Small Restaurants
PROs typically negotiate contracts individually, although you may be able to estimate the potential licensing fees in advance. While this can be a complicated process, PROs generally want smaller businesses to have a fair deal, so if you run a small family restaurant, your fees will likely be much lower than they would be for a nationwide chain restaurant.
There are some exceptions for establishments based on size. Under Section 110 (5)(B) of the Federal Copyright Act, if your restaurant is smaller than 350 gross square meters (3,767 square feet), you are exempt from PRO fees as long as you do not charge customers to listen to music, and it's only transmitted from a radio, television, cable, or satellite source, among other restrictions.
However, this exemption does not cover online streaming music services, as these are not considered broadcast media. You still cannot use your personal Spotify or Google Music account for a playlist designed for your restaurant.
Do I Need Music Licenses for Live Music in My Restaurant?
If you offer live music, DJs, or karaoke, you still need appropriate licenses to play music in your restaurant.
Here are the rules for most types of live music events in restaurants:
- Open mic: If these musicians or composers have not been recorded or published and they give you permission, you do not need to pay to license their work.
- DJ music licensing: DJs are typically their own business entity, but they are not responsible for the music license. Whether you ask a friend to DJ music for you as a favor or you hire a famous professional DJ, the venue (not the artist) is responsible for music licensing. The only legal exception involves a private event like a wedding or birthday party. If the DJ illegally downloads music rather than using reputable music services, they are legally responsible, not you as the business owner.
- Karaoke: Laws around karaoke songs in the U.S. are even more complex than just playing music in your restaurant. Karaoke songs are reproductions of music, not original recordings, so karaoke hosts typically need their separate licenses and rights with the organizations that create these songs. However, as a restaurant owner, you must have the right business license to cover playing these songs with the PRO managing the rights to the original.
- Cover bands: If a band plays their original music that is not recorded or published, you do not need to negotiate a new contract with a PRO. However, if you host a cover band, you will need licensing to cover these songs. The band will also need to license the songs they cover since they will also likely benefit financially from using another artist’s original work.
The required licenses vary based on the songs played, but if your live acts play songs other than their own, you should consider purchasing licenses from all the performing rights organizations. The number of nights you offer live music or cover charges can also impact your licensing costs.
Depending on your restaurant's location, you also need a local entertainment permit for live music events. Details are usually available on the website for your city. The licenses offered by business music solutions like Pandora CloudCover do not cover live music. But they do cover so much else.
Penalties for Playing Music in a Restaurant with No License
Paying the appropriate license fees for the music you play in your restaurant supports artists and helps them to continue creating music. In a nutshell, it’s the right thing to do.
Many quick-service restaurants, especially new ones, operate on a limited budget and often ask, "Do I have to pay for music licenses for my restaurant?”
Remember, performing rights organizations send investigators disguised as customers to restaurants throughout the United States to check compliance with licensing regulations. If the PROs find that you play copyrighted music without the appropriate license, they can sue your business.
How Has Technology Changed Music Licensing?
The advent of streaming has changed almost everything about the music business, including licensing. In the past, restaurant owners had to purchase records and CDs, look at the label to determine what PRO to contact, and then purchase a license.
Modern streaming means that restaurant owners can purchase a license that comes with a platform pre-loaded with music you can play with a fee. Managing that license is easier, too. When your contract lapses, your access to the app ends at the same time. Losing access could be just the reminder you need to renew your license.
How Pandora CloudCover Makes It Easier for Restaurants to Play Licensed Background Music
Acquiring a restaurant music license directly from a PRO is often costly (especially if you need all of them), and reporting requirements can be taxing for already busy restaurant owners. Working with business music solutions can be a better choice.
Pandora CloudCover subscriptions cost $17.95/mo (when prepaid annually) up to $29.95 monthly with fully licensed, ad-free music stations. Pandora CloudCover users can control the music experience with hand-curated stations, dayparting (to play the best music at the right time), or custom audio advertisements.
Still have questions about how to legally stream music in your restaurant? We’re excited to help you learn about how to protect your business and deliver memorable customer experiences with the perfect music.
Call us at (844) 422-6249, chat with us on our website, or email sales@cloudcovermusic.com.
FAQs About Music Licenses for Restaurants
These are some common questions about music licenses for restaurants:
Do I need a License to play background music in my restaurant?
Yes. Playing music in your restaurant is considered a public performance. You’ll either need licenses from the major PROs to play each song, or you can subscribe to a commercial streaming service like Pandora CloudCover.
What music can I play in my restaurant without a license?
You can play music in the public domain, music you create yourself, royalty-free music without a license. Alternatively, you could play music under a Creative Commons license without paying a fee.
Do I need a license to play Spotify in my restaurant?
Yes. You cannot use personal music streaming accounts, like your personal Spotify or Apple Music account, in your business. You need a commercial or business streaming account, like what we offer at Pandora CloudCover. You can then play fully licensed music in your restaurant.
Is it expensive to license background music for my restaurant?
Not necessarily. If you work with a commercial streaming service like ours, you pay a reasonable monthly (or annual) fee for fully licensed music. You get to choose from a large library, and the music you play is free from ads. If you buy the rights to songs individually from PROs, it can get expensive, and the process is difficult to manage.
What are the specific licenses I need for live versus recorded music in a restaurant?
To play recorded music, you’ll typically need public performance rights from a PRO. These licenses allow you to play recorded songs within the PRO’s client base. If you’re hoping to play live music, you’ll also need a public performance license. However, if you’re hoping to create a recording of the song and distribute it, you’ll also need a mechanical license to do so.
How do I handle music licensing if I’m hosting a special event or theme night?
Any music you want to play inside your restaurant should be accompanied by a license. That rule holds true whether it’s a standard day or a special event. Look over the playlist and ensure that you have a license for each song you play. If you don’t have a license for that song, pull it from the playlist.
Can I negotiate the terms of my music license?
It depends. Some PROs will negotiate with companies that have several open establishments. For example, if you’re an entrepreneur with multiple restaurants, you could ask for a discount for the multiple licenses you’ll need.
How can I ensure that I’m complying with the law?
Maintain good records of the licenses you have and the songs you’ve played. Review your license regularly and ensure it covers the types of songs you’re playing. If you have any questions about your license, call an attorney.
References
Report: Music Can Increase Restaurant Sales by 9%. (March 2017). FSR.
The Impact on Music in Restaurants. (April 2017). Research Gate.
Chapter 1: Subject Matter and Scope of Copyright. U.S. Copyright Office.
Do DJs Need a Permission or License to Play Songs? Improving DJ.
For Bars and Venues: USA Karaoke Licensing Explained in 5 Minutes. (March 2023). Singa.
2023 Royalties and the Law for Cover Bands You Must Know. (January 2023). Gem Tracks.
Music Licensing for Bars and Restaurants: What You Need to Know. Bar Business Owner.
Restaurant Learns It Has to Pay the Piper. (April 2018). Courier Post.
What Musicians Should Know About Copyright. U.S Copyright Office.