What should your customers hear when they walk into your shop? As a small business owner, you would probably like them to hear the sounds of excited chatter and cash registers completing sales. But consumers might like to hear something completely different.

Filling your shop with music can make the shopping experience so much better for your customers. The tunes you play could encourage them to linger longer in your company and spend more money at the same time. But those same tunes could bring your shop to the attention of an entirely different audience.

Canadian laws protect the rights of the people who create and record the music you play. That means you will need to follow a few extra, but crucial, steps to ensure that your business is in compliance. If you do not follow these rules, you could leave your business open to legal action, and that could be catastrophic to your life as a business owner.

Canada's Fee System

If you plan to use music in your store, the most important tariff for you to understand is Tariff 15A. According to Small Business BC, this tariff provides you with a blanket license to play background music throughout your business. You will not get access to music with this tariff (you'll still need to buy the music you want to play), but you will be paying the fees that go back to support the people who created the sounds that fill your shop.

If you would like to do something innovative with music, such as contracting with a live band to play music in your store for a special event, you might be subject to other tariffs, according to SOCAN. Each time you think about mixing things up with music, you will need to be aware that your licensing needs might be changing. But if you are only interested in background music, 15A is the major tariff you must adhere to.

The fees you pay through a tariff system are not negotiable, so you will not be able to contact the companies that administer them and ask for a special deal or a discount.

Those fees, according to SOCAN, are certified by Canadian officials. That means you won't have much wiggle room. The fees that the companies expect are those you will be asked to pay. This is the one place where your negotiation skills may not help you.

When the fees are in the process of being set, however, you may have an opportunity to make your voice heard. According to Re:Sound, companies go through a step-by-step process when determining tariff rates that follows this plan:

  1. Application for tariff sent to Copyright Board
  2. Publication of the application in the Canada Gazette
  3. Discussion period, lasting for 60 days
  4. Public hearing
  5. Follow-up questions
  6. Final decision

As a small business owner, you could look for information about the application, submit objections, and head to hearings. You could speak up for other businesses like yours and ensure that the fees aren't unreasonable. This is time-consuming work, but it could help you to lower the next bill that comes your way. But once the tariffs are set, they are set.

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Who Collects Tariffs?

In Canada, there are two main performing rights organizations (PROs) that have the authority to collect tariffs on behalf of the people who hold a copyright to the music played. Those two companies are SOCANand Re:Sound. As points out, these two companies serve Connect Music Licensing different copyright stakeholders.

SOCAN represents:

  • Songwriters
  • Lyricists
  • Composers
  • Music publishers

Re:Sound represents the people who play on recorded music as well as the record companies that produce the recordings you play. They are not involved with composition as much as execution.

Both of these companies follow the tariff-setting procedure outlined above, and both are empowered by Canadian authorities to collect tariffs and distribute them to the people who hold copyright. They have the same amount of power, but they serve different audiences.

Unfortunately, a relationship with one entity will not protect you from violating the rights of the other entity. These two companies do not work together to distribute fees. They don't even communicate with one another. It is also not uncommon for a song you might want to play to have copyright holders affiliated with both companies. In order to have true protection, you will need a relationship with both companies.

These companies don't just represent artists living and working in Canada. Instead, these companies represent a wide variety of music professionals living all across the globe.

When music is played in Canada, it is the responsibility of the PRO to collect the fee and distribute it to the person (or people) who hold the copyright, no matter where that person was born or where that person lives now.

This is a model that is followed all over the world, with different companies administering rights per the laws of that country. Most music professionals understand these laws very well, and they work hard to support the companies that provide them with the fees that support the work they do.

Some small business owners contact PROs directly to set up an agreement. They may call the companies, or they may seek them out online to pay their fees. But these two companies are not opposed to hiring staff to investigate evidence of businesses playing music without the permission to do so.

In an article published in The Globe and Mail, reporters suggest that Re:Sound has inspectors on the payroll, and their job is to conduct outreach and explain the law. In a piece published in Electric City, authors suggest that SOCAN has a similar model, but SOCAN does announce visits in advance, to spur companies to comply.

It is important to note that these companies collect fees in accordance with the law, not their own opinions. They have the weight of the law behind them. If they walk into your shop and notice that you are playing protected music, and they look at their notes and see you have no license, you are in violation. Since most shops are open to the public (that's how one gets business, after all), it is nearly impossible to prevent an inspection. These people can walk right in and clearly see if you are paying attention to the law or not.

Consequences for Breaking Copyright

Protections for music creators are enshrined in Canadian copyright law, and those protections allow these creators to both profit from their work and control how that work is used by people who do not have a copyright.

There are fees for violation built right into Canadian copyright law, but they can be complex and hard to understand. For example, according to an online version of the law provided by the Government of Canada, fees for violation can range between $100 and $20,000, depending on a variety of factors, including the business type, whether you knew about the violation, and more. In the end, it is up to the court to determine what fee is just for the violation you commit. That leaves you at the mercy of the court.

Avoiding Fees Altogether

No one wants to go to court and get slapped with a fine for damages. But you may not want to form relationships with two big companies in order to play music in your shop. There are a few other options you can consider, although they both come with a few risks.

Music that falls within the public domain is no longer protected by any kind of copyright law, and that music can be used by anyone without paying any kind of fee. According to the Canadian Musical Reproduction Rights Agency, Canadian copyright expires 50 years after the death of the composer and the lyricist of the work. If you want to play very old music, this could be a good option.

However, this public domain rule only applies to the original recording of the work. Any reimagining or re-recording of the work wouldn't be covered by this rule. So, if you're planning to push Michael Bublé singing classics through your loudspeakers, you could run into trouble.

There are exceptions involving radio, according to the Retail Council of Canada. If you choose to play radio in your shop through a traditional radio receiver (not the internet), you could avoid paying fees.

But if you follow this route, you will have no control over:

  • The music played.
  • The commercials included.
  • The banter of hosts between songs.
  • The quality of the sound.

Imagine that you're playing a radio program in your store and a commercial for your competitor comes over the loudspeaker. What if the hosts say something insensitive that offends a customer? Using radio may be free, but it could really impact your business.

Safer Alternatives

Most modern consumers are accustomed to controlling music through apps. We create soundscapes that suit our work, our workouts, and more. We give a thumbs-up to the songs we love, and we skip those we don't. The more we use these apps, the more we become like disc jockeys for our own lives.

There are several companies, including ours, that offer this same technology to small businesses. You can use an app like this to help you create the perfect soundtrack for your store that reflects your brand, pleases your customers, and increases your profits. If you partner with a reputable company like ours, your tariff issue will be covered.

At Cloud Cover Music, we work with small business owners all over Canada. We would love to explain how our program works, and we would like to give you the opportunity to take a trial run with our program and see if it works for you. It takes just minutes to get started. Contact us to find out more.