Pandora is one of the most popular music streaming services available online.

The basic Pandora service is powered by the Music Genome Project, which is considered to be the most powerful analysis of music undertaken so far. The program gathered information about songs and musical preferences for more than 10 years, linking rhythm, mode, beat, genre, and lyrical preferences, so Pandora could recommend songs you may never have heard otherwise.

When you sign up for Pandora, you are asked about your favorite songs or artists, and that information will generate a new “station” for you. After you have a station set up, you can refine the songs you hear by liking or disliking them in the service.

This power allows you to control the kind of music you hear, so you know you will enjoy your station as you refine it more. This approach to creating a musical list can also be appealing for business owners; you can pick a genre you know your patrons will enjoy and let it play. However, there are several downsides to using a service like Pandora in your business, including potential legal problems.

Pandora Streaming Is Not Optimized for Business

Although playing Pandora in your restaurant, storefront, or office may seem like a good solution to providing inspiration and soothing sounds to your patrons and employees, there are some reasons this may not be the best solution.

  • The free version of Pandora plays ads every few songs, so you will likely subject those around you to advertising.
  • Although you can “thumbs down” songs you do not like or that do not fit, this may interrupt the flow of music.
  • There may not be censoring of explicit lyrics or content in the songs, which could offend shoppers or employees.

More important than all of the issues above, playing a Pandora station in a commercial or business setting breaks the law.

Terms of Soundtrack Service and Licensing

We all agree to terms of service when we sign up for online services, but few of us read them in depth. Pandora’s TOS are clear that using their service in a business, retail, restaurant, or other commercial establishment requires different licensing for the music, which Pandora says must happen through a separate service. You can privately listen to any Pandora station you create, but playing that station in front of patrons at your business is illegal.

This is true whether you have a free or premium Pandora account. It does not matter if you pay a monthly subscription fee to avoid advertising through the streaming service, the TOS do not allow you to use music outside of private or personal settings.

The legal reason behind this has to do with performing rights organizations (PROs) and how they manage licenses for music.

How PROs Manage Licenses for Business

A PRO is an organization within the larger music industry, which manages licenses and royalties for music copyright holders – publishers, composers, musicians, and other artists. PROs collect money through public performance royalties to ensure that artists and rights holders receive appropriate payment for their work. If you hear a popular song in a commercial, for example, the company that made the commercial paid to license that song for a certain amount of time while the commercial is broadcast.

You need specific licenses to play music in your business even if you stream songs in the background. This is because playing a song before a significant number of people, or if there is the potential for a significant number of people, is considered a public performance even though the music is prerecorded and played through a totally different service. Personal music streaming services like Pandora have licensed with PROs in specific ways to get access to music you might like, but this license does not cover commercial applications.

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Legal Problems With Streaming Pandora in Your Business

If you are caught streaming music in your business that you did not pay a business license for, you will face a lawsuit from the PRO that manages that song’s copyright. You will also face large fines. This means you could face a payment of $750 minimum or as much as $150,000 per violation. If you play from a streaming service, you likely get music from multiple PROs, so you may face legal problems with several of these organizations.

Why will you face these fines? It is legal to play broadcast radio in your business, but that is because radio stations have a decades-long relationship with PROs and advertising to pay for specific kinds of licenses that cover accidental public broadcasting. While Pandora advertises itself as a kind of radio station, you will hear songs you like several times as the algorithm figures out how to relate your tastes through the Music Genome Project. With high repeatability and a different kind of licensing for personal use, simply playing Pandora stations in your business will not work.

You can contact a PRO individually and pay for these licenses yourself; this is very expensive, but exactly what most business owners did. But if you want a wide variety of music, including the most popular songs of a genre, you will likely need to take out licenses with multiple PROs because their catalogues do not overlap.

Instead of paying for all these licenses and trying to juggle which songs you can legally play, music streaming through mobile devices and apps has provided business owners with a great opportunity. You can get the convenience of a streaming service like Pandora, but by working with a commercial music streaming company, you don’t have to worry about licensing with PROs directly.