The Restaurant Owner’s Guide to Playing Licensed Music
If you operate a fast-casual or quick-service restaurant, you already know that crafting the right atmosphere is crucial to building customer loyalty.
Today’s diners expect more than just a meal – they demand memorable experiences. The right music enhances a restaurant’s atmosphere and according to a recent study by HUI Research, has been proven to increase sales by as much as 9%.
One of the most common questions busy restaurant operators ask is “how can I play music in my restaurant legally?”
To help answer this question, we’ve compiled an actionable guide to make playing licensed music for business simple and worry-free!
- Is it legal to stream music from Spotify, Pandora or Apple Music in a restaurant?
- Can restaurant operators play music purchased through iTunes, Google Play or other digital sources?
- What are Performance Rights Organizations?
- How do I license music for my restaurant?
- Do I need music licenses for live music in my restaurant?
- Are music licenses required for all restaurants?
- What are the dangers of playing music in a restaurant with no license?
- What is the easiest way for restaurateurs to legally license music for business?
Is it legal to stream music from Spotify, Pandora or Apple Music in a restaurant?
When you pay for a subscription to a music streaming service like Spotify, Pandora or Apple Music you are actually paying for a license and not a copy of the song. Such licenses cover individual or personal usage for the music and if you look carefully, the terms and conditions for these streaming services only include rights for non-commercial use of content - meaning you’re free to play all the 80’s jams you want at home, but you can’t share that perfectly crafted Spotify mix in your restaurant.
If you play digital music in your business with songs from any artist signed by a record label, copyright and music licensing laws typically apply. U.S. Copyright Law requires that restaurant owners pay for Public Performance Licenses (PPL) from Performance Rights Organizations (PROs) that control rights to a particular song.
Can restaurant operators play music purchased through iTunes, Google Play or other digital sources?
Many restaurant or bar owners think that purchasing music digitally means that you own a song. Unfortunately, this common misconception can be a costly one for business owners. When you buy songs or albums as digital content, you do not acquire any ownership rights to a song; you’re essentially just paying for a license to access the song on demand via your devices.
Any time you play digital music in your restaurant, whether downloaded or streamed, copyright laws apply and you need to pay for Public Performance Licenses (PPL) from the appropriate Performance Rights Organizations.
What are Performance Right Organizations?
In the music industry most songwriters or publishers join Performance Rights Organizations (PROs) who control licensing when offices, stores, restaurants, bars or other businesses play music for the general public.
A digital audio transmission of a musical recording will usually require a license for both the sound recording and the musical work. SoundExchange is the only US organization that collects performance royalties for "non-interactive" digital sound recordings (not compositions). Re:Sound is the Canadian equivalent. These organizations represent the artists & labels.
The main PROs in the United States are the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and Global Music Rights (GMR). In Canada, the main PRO is Society of Composers, Authors and Music Publishers of Canada (SOCAN).
The PROs collect both digital, terrestrial (AM/FM radio) and live royalties for the associated songwriters and publishers. They represent a vast number of songwriters and publishers, enabling them to set one large fee that covers licenses for all songs in their catalog or library of represented music. Performing Rights Associations 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.
PROs regularly contact thousands of quick-service restaurants per day to discuss licensing, so chances are you will receive a phone call from them at one point or another.
How do I get music licenses for my restaurant?
To obtain licensed music for restaurants, owners opt to work with business music services like Cloud Cover Music that simplify the process of licensing.
Alternatively, some business owners decide to acquire licenses directly from each PRO. Music licensing fees for quick-service restaurants are typically charged annually and costs can range based on the square footage of your restaurant, whether you offer live music or audio streaming only, or the frequency of playing music.
However, when you obtain a license from just one PRO, there may still be additional licenses needed to cover your restaurant legally. A license with one particular Performing Rights Association only grants your restaurant a license for copyrights associated with that particular PRO.
As an example – if the songwriter of one song is affiliated with BMI and the publisher is affiliated with ASCAP, a restaurant operator need licenses with both BMI and ASCAP to legally play music for business. Even more challenging, the searchable databases of available music from a PRO are not always updated, which could put your business in a legal bind. We strongly recommend that restaurant owners pay licensing fees for all of the PROs to play it safe and minimize legal risks.
To research each PRO and determine which organization you might need a license for, you can visit the following links for searchable databases of each PROs catalog:
Do I need music licenses for live music in my restaurant?
If you offer live music, DJs or karaoke, you will likely still need licenses to play music in your quick-service restaurant.
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 of the Performing Rights Organizations. Remember that most musicians or DJs play at least a few cover songs written by other songwriters. The number of nights that you offer live music or cover charges can impact your licensing costs.
Depending on where your restaurant is located, you also need a local entertainment permit for live music events. Details are usually available on the website for your city.
Are music licenses required for all restaurants?
Some exceptions to music licensing requirements apply for smaller restaurants. Under section 110 (5)(B) of the Federal Copyright Act, restaurants or bars that meet the following requirements may be exempt from licensing requirements for radios and television broadcasts if they are
- Less than 3750 gross square feet, or
- More than 3750 gross square feet, and
Again, these exceptions only apply to radio and television broadcasts regulated by the FCC.
If your business is broadcasting live music, karaoke, CDs, digital files, or DVDs, then you'll have to pay to play music in your business. If you’re unsure about any of the exemptions for your restaurant, it’s wise (and likely cheaper!) to consult with your attorney before deciding not to purchase licenses.
What are the dangers of 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. In a nutshell, it’s the right thing to do.
Many quick-service restaurants, especially new ones, operate on a limited budget and we often hear the question, "Do I have to pay for music licenses for my restaurant?". Avoiding paying licensing fees to save in the short term can be a costly mistake.
Remember, Performance Rights Organizations routinely 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.
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 of last year, 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, there are more economical, easy solutions for music licenses available for restaurant owners.
What is the easiest way for restaurateurs to legally license music for business?
Acquiring a music license for your restaurant 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.
Savvy operators are increasingly turning to business music solutions to streamline the process and cut down on the costs of music licensing. Best of all, these solutions manage the tedious paperwork of licensing for you, while you focus running your restaurant.
Cloud Cover Music subscriptions for $17 to $30 with fully-licensed, ad-free music stations. Cloud Cover music offers the ability to control the music experience with hand-curated stations, dayparting (to play the best music at the right time), or even custom audio advertisements.
Talk to an Expert
Still have questions about how to legally stream music in your restaurant? We’re excited to help you learn all you need about how to protect your business and deliver memorable customer experiences with the perfect music.