Playing Music in a Commercial Setting: Licensing, & Legality

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Music sets an emotional scene, so getting the right music for your business is crucial.

Businesses — from online content creators to retail store managers to medical practitioners — want access to great music. The right track can put a consumer’s mind at ease, get them excited about the product, and convey the story of the brand, all in the span of a few minutes.

Getting the Music You Want: Legally Licensing Songs

There are several ways to get music for a business venture. Major film studios, for example, commission composers or pay popular musicians to create soundtracks for large motion pictures. Commercials for cars, electronics, and clothes might feature original songs or the latest trendy pop hit. A YouTube streamer might play ambient music that they found online.

These are all different approaches to finding and using music, but they each have something in common: licensing intellectual property rights for the music’s specific application. U.S. intellectual property law provides creative workers like composers and musicians a way to receive payment for their hard work when another business entity decides to use a piece of music in a manner that financially benefits them.

Regardless of the type of business you run, it is important for you to get the right music license if you want to use one or more specific songs.

Understanding the Legal Basis of Playing Music in a Commercial Setting

Copyright laws are designed to protect both the creative work (the lyrics and musical composition of a song) and the recording of that work.

Per American copyright law, a person with “rights” can make copies of the item, distribute it, and make new art from it (like a remix). Anyone who does not have a copyright must have a license to do these things.

If you’re playing music in a commercial setting, you’re technically distributing the song to a wide audience. It’s illegal to do so without a license, and the penalties can be steep. If you use music without a license, it’s considered a copyright infringement. Criminal penalties can include imprisonment for up to 5 years and fines up to $250,000 per offense.

Royalty-free music is different. Songs in this category may require an upfront payment.

Songs that are in the public domain are not protected by copyright laws, as the protections have either expired or the artist never applied for such legal status. Most songs in this category are clearly marked and easy to find.

A few critical terms that can help you understand the legal issues involved include the following:

  • Copyright: This is legal ownership of a song’s composition or recording. Someone can hold the copyright to both aspects or just one part.
  • License: The entity holding the copyright allows another entity to use a song in a limited and specific way.
  • Royalty-free: While public domain music is entirely free to use in any application, royalty-free music is not necessarily free of charge. Many artists release music as royalty-free and require an upfront payment. Once you have submitted this reasonable expense, you are allowed to use the song in any manner you want.
  • Public domain: These are songs that once enjoyed copyright protection, but that protection has expired. Public domain songs can refer to the composition only (not the recording), so modern interpretations of old songs might still need licenses for fair use.
  • Creative Commons: This is a new type of intellectual property licensing inspired by creators offering their work for free to their audience online. The Creative Commons license allows the artist to retain intellectual property rights after their work is published while simultaneously specifying free and open use of their work in certain settings. Many musicians offer their songs for free to filmmakers, bands, content creators, or brick-and-mortar stores who want to play music. Sometimes, the artist specifies that they want credit for their work.
  • Fair use: In some instances, even copyright-protected music can be used in commercial spaces. These include fair use purposes like research, criticism, teaching, parody, or news reporting. However, what is considered fair use depends on the artist or copyright owner, so it may be unclear when certain applications are legal or not.
  • Performing rights organizations: Organizations like BMI, SESAC, ASCAP, and the newer Global Music Rights (GMR) manage catalogs of thousands of songs from thousands of artists. Licensing agreements are easy to purchase through their websites. Although all these organizations have large catalogs, they do not manage the same artists, so you may find yourself purchasing commercial licenses through more than one of these organizations to get the music you want for your commercial setting.
  • Online streaming music services: The most famous of the music services are Muzak and DMX. These groups work with PROs to get licenses for a wide range of background music — a soundtrack played in spaces where the patrons may not pay attention exclusively to each song. Some music services charge a flat monthly subscription fee based on how many commercial spaces are expected to have access to the catalog. It is important to note that streaming services, like Pandora or Spotify, have commercial versions that you can subscribe to, but having a standard personal membership does not qualify you to make a playlist and broadcast it in your business

How to Get a License Step by Step

Before you start playing music in a commercial setting, you need the right license for the songs you want. A typical process looks like this:

1. Research Your Options

Performing rights organizations (PROs) hold copyrights for the song’s composition, the song’s recording, or both. Several of these organizations are active, including the following:

Most will have a list of protected artists or songs plainly visible, but some have search functions available. Ensure the group you’re contacting is legally responsible for negotiating copyright licenses.

2. Contact the Organization

Once you’ve determined who holds the licenses for the music you want to play, it’s time to negotiate. Send an email to the group you’ve identified and talk about what song you want, how you want to use it, and how many people (potentially) might hear it.

3. Sign the Paperwork

The PRO will offer a contract that outlines how you can use the song and how much you’ll pay for a license. Review the terms and conditions carefully before playing music in a commercial setting. If you violate the rules, the organization could come after you with fines and sanctions.

Cost Factors to Consider

How much will you pay for the songs you’d like to play in a commercial setting? The answer can vary dramatically.

PROs often examine factors like the following when setting pricing:

  • How popular is the song?
  • How large is the organization that wants to use it?
  • How many people will be exposed to the song via this license?
  • How will the song be used?
  • How much revenue might the application generate?

Each PRO can set licensing fees very differently based on the answers to these questions. In some cases, it’s less expensive to create a relationship with a PRO and gain access to the entire catalog for a fee. If you only want one song for a limited application, negotiating for just that song might be less expensive.

PROs like ASCAP don’t make their fee structures public, so it’s impossible to estimate how much one song might cost. To find out, you must contact them directly.

Types of Licenses & Music Use

Before you start buying licenses for music, it is important to understand your options in this area. The law makes certain exceptions for using some kinds of music, but many people find it beneficial to go through a company (either a PRO or a music service) to get licenses.

  • Master license: This license grants a person the right to the original (or master) recording of a specific song, which could be remixed in a new way.
  • Mechanical license: This license allows you to distribute a song via audio formats (such as over a speaker).
  • Synch license: This license allows you to play music accompanied by something visual (like a video or photos).
  • Public performance: This license allows you to play a protected piece of music live in a public place.
  • Theatrical license: This covers the right to use a song in a live performance, including in a cover band, a staged musical, or a similar performance.
  • Blanket license: Many PROs offer this to businesses, particularly brick-and-mortar stores who want the ability to play many songs in the PRO’s catalog in rotation.
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What Is a PRO, and What Is a License?

PROs are organizations that professional lyricists, composers, and publishers join in order to help their music be distributed more widely while also protecting their intellectual property. In fact, over 85 percent of the fees collected from licensing music by the two largest American PROs are paid to the artists as royalties.

The PRO system is the best way for musicians and composers, whose work has been published, to receive regular payment for their intellectual property, as it becomes more widely distributed.

These organizations manage the legal distribution of music to businesses of all kinds: filmmakers and producers, live performance venues, restaurants and bars, retail shops, and even commercial spaces, which now include office buildings, business meetings, and similar applications.

Every time a song is played in a space where a significant number of people can hear it, the music industry considers that a public performance. The original musician or composer does not have to be present and performing it at that moment. The recording is legally considered a performance every time it is played. Since a business may financially benefit from certain music choices, that performance should be paid for.

PROs typically negotiate contracts with individual businesses to be clear about how the music will be used, how often, and how large the audience will be. Then, they use this information to determine the fee they charge to the business. This information is based on what type of license the business needs, which might be:

Performance Licenses & Exceptions in Brick-and-Mortar Businesses

Businesses that have physical spaces often want to play music, but this requires licensing for this type of public performance with a PRO. Commercial spaces benefit from playing music for their customers, which includes financial benefit. Therefore, licensing is required so the original artist also receives compensation for their work.

Commercial spaces include conference rooms, shopping malls, office buildings, meeting rooms, presentations, trade show cubicles, and even the hold music that plays while waiting on the phone. Unless you have written and recorded your music yourself, you must purchase specific types of commercial licenses in order to legally play music in these public business places

There are some exceptions regarding performance licenses for music. The business owner may qualify for a "home-style exemption" if the following criteria are met:

  • Any given composition cannot be heard beyond the premises.
  • There is no charge for admission.
  • The only source is a radio, television, or satellite source.
  • The grounds are smaller than 2,000 gross square feet.

However, some restrictions apply:

  1. Radio transmissions cannot be broadcast over more than six speakers, with no more than four speakers in any given room.
  2. Television broadcasts cannot come from more than four TVs in the establishment, with no more than one TV per room.
  3. No TV can be larger diagonally than 55 inches.

While many business owners understand that the confines of their brick-and-mortar establishment must be covered by a license when customers are around, there are several nuances to music copyright law, especially as those laws are revised, which require commercial licenses. Too many businesses get into legal trouble before they understand the differences.

Below are some common commercial applications for music that require licensing:

  • Offices: Professional office spaces often unintentionally break music copyright law. It may seem harmless to play a specific song in a business’s cafeteria, breakroom, or coffee area during a birthday or holiday celebration among employees or during an employee presentation. However, as copyright law changes and evolves, each of these instances requires that the business or individual hold a license for the music used.
  • Waiting rooms and lobbies: If your business rents or owns space in a larger commercial office building, you are not responsible for the music they choose in their public spaces, like the leasing office, lobby, or elevator. However, if your business owns these spaces, you are responsible for the music licensing.
    You can choose to play a radio station within the above limits, but your patrons may not enjoy hearing commercials, static, or songs that are not appropriate to their mood. You have much less control over a radio station’s choices, which can influence whether your patrons enjoy being in your lobby or waiting room and if they choose to come back.
  • On-hold music: Most larger companies purchase music specifically written to be played while a caller is on hold. Companies that compose these soundtracks range greatly in size, from large to home-based companies. However, familiar music is increasingly being used as on-hold music, so licensing these songs with this intention through a PRO or music service will be important for your business.
    The phone may not seem like a commercial space, but it is part of your business that gets traffic from consumers.
  • Elevators: Many people joke about the poor music choices in elevators, but many companies have made those poor decisions for strategic reasons. The history of music in elevators is a study in early psychology. Muzak was invented in 1922 to calm people who may have a fear of elevators, and it has stuck around as a stereotype ever since. This may also be called Muzak environmental music.
    More modern elevators still play calming music, but songs can range across genres, depending on what the business needs. And to play this music, even Muzak, the business owner needs a license.
  • Trade shows, conventions, and meetings: Maybe you are working on a slideshow presentation and want a specific song playing at the end; perhaps you are working on a speech at a convention and need a playlist as the audience comes into the room; or maybe you have a booth at a trade show and want to draw attention with some energetic music. All of these may seem like harmless uses — after all, you are not directly making money from any of these events — but under recent changes to U.S. copyright laws, you may have to pay to use a song for even a small business meeting.

Filmmakers & Content Creators

Getting a music license for a film, video game, television show, web series, live streaming show, or other kind of content is different in some ways from getting a license for a brick-and-mortar storefront, but in other ways, it is similar. For example, anyone who runs this type of business should contact a PRO to negotiate a contract; however, that contract will be calculated differently because the audience is different.

Most filmmakers, regardless of medium, need a sync license. This is because the song will be synchronized with video of some sort, whether it is a commercial, music video, intro segment for a show, or montage sequence in a film. Movie and television production studios have departments that negotiate these contracts with PROs. As an indie filmmaker, web series producer, or individual content creator, you may need to check with the PRO’s website to begin the contract process and make payments.

If you are a one-person operation, especially as an online content creator, you may be worried about the time involved in negotiating these contracts and the cost of the license itself. If you regularly produce content, you may need access to a big library of music you can use, but you do not want to pay hundreds or thousands of dollars.

Companies like YouTube can help small producers navigate this problem within their platform by offering the ability to check on what type of license is associated with the song, to determine whether you can use it on a monetized platform or not. Then, you can purchase a license for that individual video or manage other types of music licensing for your whole platform.

Marketing Material & Other Public Performances

Some businesses assume that adding music to a slide presentation or internal training video is acceptable use of a song and they do not need to pay a license fee. Depending on the size of the audience, this may not be true. Here are some examples of times you will need to license music, even if it is for internal use:

  • Conference presentation: If you send representatives of your business to a conference, their presentation is not internal use, as it is being presented to a larger audience that might financially benefit you. This is considered a public performance.
  • Training videos: If you produce a training video with paid actors, producers, and editors, you will also need to license any music you use, unless you specifically commission composers for this video.
  • Lobby graphics and displays: If you apply music to any kind of video or image slideshow that is presented within your business like in your waiting room, offices, or lobby, you will need to license the music.

The Benefits of Music Services

If you want to play background music in your business, it’s worth it to sign up with a streaming music service. You can then rest assured that you are legally playing music, and you can get assistance with playlists. Consider a music service like Pandora CloudCover to help you manage licenses and create an environment for your business that supports your patrons.


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