Playing music in your business without the right license means you not only must pay licensing fees to the performing rights organization, which could be $200 or more every year, but you will also pay additional financial penalties based on United States copyright laws.
For example, Chapter Five of the U.S. Copyright Law specifies statutory damages and fees starting at $750, which is the smallest possible amount you will pay on top of licensing fees. The highest these fees can go is up to $30,000.
These amounts represent penalties just for playing music without a license. If the court decides that you intentionally or willfully broke the law, you can incur further financial penalties of up to $150,000.
A performing rights organization (PRO) - organizations that protect the intellectual property rights of musicians and composers based on national and international law - can argue that you willfully broke the law if you ignore letters they send you with information about their licensing fees, when and how you broke these agreements, and how you can contact them to pay.
Why You Might be Fined
Playing music in your business could be a form of copyright infringement which could incur a significant fine.
In U.S. copyright law, copyright infringement is defined as the use of copyright-protected works without appropriate permissions. This infringes on the intellectual property rights of the creator, including the rights to:
- Reproduce
- Distribute
- Display
- Perform
- Create derivative works
Copyright violations are most famous as piracy, including downloading movies or music from online sources without paying for a licensed home copy through a streaming service, on a hard copy like a DVD or CD, or other similar violation. However, playing music in your business without the right type of commercial license (for example, using a personal music streaming service like Spotify or Apple Music rather than paying for a business-focused streaming service like Cloud Cover Music) is a violation of copyright law.
What Are the Fines I Could Incur?
If you violate U.S. copyright law, you potentially face tens of thousands of dollars in fines. A PRO may send you a letter when they note your first offense. Costs you incur can range from a few hundred dollars if you are a small business and you violate with one song, up to thousands of dollars if you are a large business or violate the PRO’s licenses multiple times in one instance.
Ignoring these letters will not make them go away. Instead, you will continue to incur fines and penalties and may eventually be taken to court. The total bill won’t just include the PRO’s licensing fees and penalties as dictated by U.S. copyright law. It will also include the cost of your attorney, court fees, and other fines determined by the judge. Ultimately, violating copyright law could put you out of business.
How Much Are the Fines?
When PROs have evidence that you are using music without the legal right to do so, they might reach out to you with a letter that demands payment based on what the organization assumes about the following:
- The size of your business
- The frequency with which you play music
- How many speakers you have that play music
- What music is used for in your business
The numbers cited in the letters are not fines per se. They are fees that the organization expects you to pay. But if you do not pay those fees, you may be subject to penalties outlined in copyright law.
Chapter 5 of American copyright law specifies statutory damages, or fees. According to the law, those cannot be lower than $750 or more than $30,000. However, if the court determines that your use of the music is somehow willful, the court could increase the damages to $150,000.
How Are Fees Collected?
There are some business owners that reach out to PROs with information about their businesses, and they set up agreements before the business opens their doors to customers. But there are some businesses that never reach out to a PRO. When that happens, PROs can send out scouts to detail how a business is using music.
That happened to a Washington business, according to the Peninsula Daily News. On one night in 2017, a private investigator sat inside a bar and wrote down the names of the songs heard. The business owner didn't know the investigator was there. She only found out about the visit when the lawsuit arrived. Soon after, the PRO filed a lawsuit for $3,000 to $120,000 for those four songs alone.
A lawsuit like this can seem like an overreaction, but it is important to know that PROs are protected by copyright law. As a lawyer writing for Law 360 points out, the copyright holder is not required to send a cease-and-desist letter and give the company time to change course. The very first time a PRO might reach out to a company could be through a lawsuit, and that is legal.
Even though PROs are not required to reach out to businesses, they often do so. For example, in a press release published by ASCAP (a major PRO), the company points out that they reached out to a set of businesses named in a lawsuit multiple times, and when no response came back, they chose to go to court.
PROs in Court
It is not at all uncommon for PROs to take businesses to court. In fact, according to USA Today, BMI (another PRO) sued more than 160 businesses in 2015 alone. This BMI lawsuit resulted in fines of $24,000 for playing four unlicensed songs. The PROs are aware that the law is on their side, and they are not afraid of using the law to get the financial support the law entitles them to.
In one case from 2015, a restaurant owner in New Jersey was sued by a PRO for the use of four songs played one night. According to the New York Post, the damages awarded in that case (which the restaurant owner lost) was $24,000. Since the restaurant owner lost the case, he is required to pay attorney's fees for the PRO, which came to $8,200.
In an article published by The Plain Dealer, a PRO representative claims that lawsuits are a last resort, used only when businesses will not comply. Even so, it could be a smart strategy. A PRO representative could document each:
- Phone call
- In-person visit
- Letter
- Package
Each outreach could be used to prove that a company is willfully ignoring the law. That could be evidence used in court, and it could lead to bigger fines for the business.
Don't Take the Risk
Ignoring the law means playing with fire, and it could have severe financial consequences. There is a better way. At Cloud Cover Music, we have relationships with major PROs, and we have extensive libraries that contain the songs you want to play. We can give you access with one small charge, so you can rest easy knowing that you are in compliance with the law. We can get you set up in minutes. Call us to find out more.
Sources
- ASCAP Sues Peninsula Bar for Copyright Infringement. (February 2018). Peninsula Daily News.
- Using Music in Your Work: Copyright Tips for Companies. (July 2017). Law 360.
- Venues Refuse to Pay Songwriters While Profiting From Their Music. (February 2018). ASCAP
- BMI Song Lawsuits Make Rounds in Jersey Bars. (June 2015). USA Today.
- Restaurateur Won't Face the Music After Losing Copyright Suit. (June 2015). New York Post.
- ASCAP Targets 9 Bars Nationwide for Music Licensing Infringement, Including Willoughby Brewing Company. (May 2017). The Plain Dealer.
- 504. Remedies for Infringement: Damages and Profits. Chapter 5: Copyright Infringement and Remedies. U.S. Copyright Office, Copyright.gov.
- ASCAP Music Organization. Britannica
- BMI and Performing Rights. BMI.
- Copyright Law of the United States (Title 17). (December 2020). U.S. Copyright Office, Copyright.gov.