U.S. In-Store Music Laws: Licensing, Legality and Fines

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Music and Copyright Law

Copyright law protects music, the artists who create the music, and the record companies that promote and market the music. Copyright law allows the owners of the music to perform their songs (when it comes to artists) and to play recordings of the songs in specific circumstances (when it comes to the record companies). A person or an entity playing music without written permission is in danger of infringing on the copyright of the music, and copyright law empowers the owner to recover monetary damages lost by the unauthorized reproduction of the music.

Damages

Entrepreneur magazine explains that the damages could be $750 for every unauthorized playback or performance, up to $150,000 or more if a court decides that the person or entity playing the music knew it was illegal and did it anyway.

An entertainment lawyer explains that, like many other things in life, “music is a commodity” – a product that can be bought and sold. Like other commodities (everything from coffee to vehicles), there are laws that dictate how the product can be bought and sold. Aside from a few exceptions, a license is required to play music in a business space, like a restaurant, a coffee shop, or a bookstore.

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What Is a Public Performance?

Most people understand that a concert is a public performance of music. But did you know that the songs you hear in the background of a restaurant are also considered public performances?

As the U.S. Copyright Office explains, copyright holders have exclusive rights over the publication of their work. They can grant permission to someone else, but if they don’t, use is unauthorized. Copyright infringement happens when a copyrighted work is performed without the copyright holder’s explicit permission.

Anytime music is played for a group of people that aren’t friends or related, this is a public performance. While you wouldn’t need a license to play music for your backyard barbeque guests, you will need a license to play music for your food truck customers.

Facing the Music

For consumers, the legal landscape when it comes to hearing music in the background can seem unnecessary, but falling afoul of the law can cost violators in a big way. In 2012, the Ninth Circuit Court of Appeals found a California business to be in violation of copyright laws when it played music without having a license to do so. The case, Range Road Music, Inc. v. East Coast Foods, Inc., involved a restaurant that has an attached bar and lounge, where live and recorded music is played. The American Society of Composers, Authors and Publishers (ASCAP) offered the owners of the restaurant a license to play music by members of the society, but the owners refused. The society contracted an independent investigator to visit the restaurant in question, document his time there, and prepare a report to determine whether the restaurant was engaging in copyright infringement. LexisNexis writes that the investigator identified a number of songs that were performed by the live musicians and played via the restaurant’s in-house CD player. For songs the investigator did not recognize, he “approached the CD player and transcribed the titles directly from the CD case as the songs played.”

Once ASCAP confirmed that the songs were being performed and played without a license from them, they took their case to the courts, which found in their favor. The restaurant chain was fined $36,000 in statutory damages and $162,728.22 in legal fees.

When groups like ASCAP sue, the entertainment lawyer told Entrepreneur, “they don’t lose.”

Exemptions to Licenses

There are exceptions to when a license is required to play copyrighted music; stores under 2,000 square feet, and restaurants and bars under 3,750 square feet, can play music over a radio, TV, or similar device, but there have to be fewer than six speakers carrying the sound. Additionally, there are limits on the placement of the speakers. Importantly, customers cannot be charged for listening to the music. Educational and charitable events are also exceptions to the rule of requiring licensing to play music in stores.

Performing Rights Organizations (PROs)

In order to obtain a license, a business will have to go to a performing rights organization (PRO), of which the American Society of Composers, Authors and Publishers is a member. Other such groups include Broadcast Music, Inc., and SESAC (originally known as the Society of European Stage Authors and Composers). These PROs and others like them are the bodies that license the work of songwriters, composers, and music publishers to the public; they are also responsible for passing on royalties to the copyright owners.

Getting a license from one performing rights organization does not allow a business to play music by a copyright holder doing business with another PRO.

As an example, the music of a song might be written by an artist represented by ASCAP; the lyricist might be represented by SESAC. If a band changes record labels, part of their discography may be licensed through one PRO and the rest through another.

To avoid this pitfall, some businesses can purchase a blanket license from every PRO it wants, that gives the business the right to play any song it wants from each library covered by the respective PROs. This is not a one-off payment; a blanket license can cost a few hundred dollars to several thousand dollars every year.

How to Get a License From a PRO

To follow U.S. in-store music laws, you need permission to play music. Working directly with a PRO can give you permission to play songs from that organization’s library. The process is relatively quick and easy.

Here’s how to get a license:

Identify your needs. Most PROs change their fees by business type. For example, a café owner has a different monthly fee than a retail outlet. PROs may also change their fees depending on the size of a facility and the number of people who might hear the music. Measure your space, get rough estimates of your customer base, and outline when music will play. Your research will help you prepare. ‍
Pick the right PRO. Several PROs exist, and they all have slightly different client lists. Look at the library offered by each PRO we mention below and choose the one that has the artists you want to listen to in your organization:‍
1. BMI ‍
2. ASCAP ‍
3. SESAC ‍
Contact the PRO. Visit the organization’s website or call the sales department. Provide details about your business and your potential use of music. The company will give you an estimate of fees. In most cases, a license will cost about $250 per year for small organizations with few customers. Large facilities with an extensive potential audience (like a sports venue) should prepare for fees of $2,000 per year or more. ‍
Sign and pay. The PRO will give you a detailed contract that outlines how you can use music and how much access will cost. Sign that document, pay your fee, and you can start playing music.

Licensing In-Store Music

Performing rights organizations might seem like unnecessary bureaucracy and legal red tape, especially if a store simply wants to have some background music to keep customers entertained, but they serve important roles for artists and music labels. The mission of a PRO is to ensure that songwriters, and the publishers who put the music out there, are duly paid for the use of their creative product. The losses incurred by the music industry due to decades of illegal downloading have made record labels determined not to hemorrhage any more profits than they absolutely have to. One way to close this wound is by partnering with performing rights organizations, which collect public performance royalties that are then sent to the label, who passes it on to the artists.

Hearing any piece of copyrighted music in public – whether at a coffee shop, retail store, or in an elevator – means that whoever is playing the music should have purchased the appropriate license from a PRO, like ASCAP, BMI, or SESAC.

Since copyright laws differ in neighboring countries, Canadian musicians and labels will do business with SOCAN (Society of Composers, Authors and Music Publishers of Canada), and a license application to SOCAN will be subject to relevant Canadian-American legal agreements.

What Businesses Need Music Licenses?

The kinds of organizations that request licenses are varied. They include the following:

Eating and drinking establishments: Restaurants, coffee shops, and bars often use music to make time spent in the facility a little more appealing. Songs can also cover unpleasant sounds like people chewing or dishes being washed. ‍
Music venues (bars, performance halls, amphitheaters) and sports arenas: Organizations like this often need licenses for live music performances. ‍
Airports: Some airports use music to help travelers feel more comfortable as they wait for their flights. ‍
Hospitals and clinics: Some healthcare facilities use music to mask conversations and make a wait more pleasant. ‍
Retail establishments:. Shopping malls, grocery stores, and other buying environments can play music to make shopping more fun. ‍
Bowling alleys, amusement parks, and other entertainment venues: Music can make spending time in these facilities more pleasant.

Any one of these places, or any other public establishment, that wants to play music for customers must go to a PRO to secure the necessary license.

Does Streaming Music Need a License?

In a similar way that a PRO license is not necessary for certain venues (based on size, the number of speakers, and whether the music is played at an educational or charitable event), music that is streamed digitally (through Pandora or Sirius XM, for example) or through a cable music channel has to be licensed through SoundExchange, which is responsible for collecting public performance royalties through digital platforms. Spotify, one of the largest music streaming services, has made its own deals with labels and publishers, allowing them to bypass SoundExchange when it comes to royalties; Apple Music has a similar arrangement.

Why Commercial Streaming Services Are Needed

It is in the best interests of artists and labels to sign up with a PRO.

It is how the content creators and copyright holders get the royalties due to them every time one of their songs is played at a restaurant or a sports stadium, or in a coffee shop or bowling alley. Given the ubiquity of Spotify and other streaming services, filing a claim through SoundExchange will also ensure that royalties are received for digital public performances.

As another popular music streaming service, Pandora’s terms of use explicitly prohibit stores from using it without a Pandora for Business account. Even if a storeowner has a private Pandora account, the terms of that account do not cover playing music via Pandora for the benefit of the general public (i.e., customers). Doing so without the protection of a Pandora for Business account could open the store up to copyright infringement.

Similarly, if a business owner has a private music-playing device (like an MP3 player), and has legally bought the songs on that device, they would still need to pay a licensing fee.

The purchase of digital music files for personal playback does not give a person, or a business, the right to play those files for the benefit of customers or the general public. The business owner can still use a personal device to play music in a business, but it then becomes a public performance, and subject to the regulations of licensing and penalties if no licensing is obtained.

Exceptions (and More Exceptions)

At a certain point, the rules become surprisingly specific.

Background Music & No Covers

The National Restaurant Association notes that if an establishment has a Pandora for Business or SiriusXM for business account, and the music being played is only intended for background listening, then customers cannot dance to the music. Following from this, the business cannot charge a cover fee for customers to enter the premises. If these conditions are satisfied, the provider of the music (Pandora or Sirius XM) will pay the royalty fees to the respective PRO.

Additional Music

If the business has any additional music – for example, live bands, karaoke, or DJs – then the owners should obtain a license from the proper PROs directly, as these kinds of entertainment are not covered by Pandora’s terms of use.

Only for Employees

Another little-known fact about in-store music laws is the exception made for businesses that offer music only for their employees. In general, licensing obligations come into play if the business wants to play music for the benefit of the general public. If the music is communicated only to the employees (preferably in part of the premises that is clearly off limits to customers, such as an office), then an argument could be reasonably made that the music is not intended for customers, and PRO guidelines would not come into play.

However, this exception has its own exceptions. If customers can still hear the music, even if it is not meant for them, then a PRO could make a claim that the general public still receives the music, and licensing obligations would apply, notwithstanding the attempts by the business to restrict the hearing of the music.

A PRO could also make the case depending on the number of customers present in the establishment.

Occupancy

The federal Copyright Act looks more at the square footage of a place of business than it does the number of seats in order to determine any radio and TV exemptions. However, a court might find in favor of the PROs if they can make the case that total occupancy exceeds reasonable standards, to the point where the general public overhearing music intended for employees is both inevitable and willful. ASCAP, for example, calculates its fees based on the fire-code capacity, and the number of nights a week that the venue offers (live) music.

For the most part, a small business of less than 3,750 square feet, with only one transmission device of acceptable size (for example, a single television set with a screen under 55 inches) will likely be granted an exemption if the other criteria are met.

Does Public Domain Count?

The National Restaurant Association acknowledges that determining the relationship between different PROs, for different music, for different applications, “can be very difficult for restaurant owners and operators.” Making the process slightly easier is that all PROs offer searchable online databases, with the necessary disclaimers that the information on those databases may not be updated and does not constitute protection from claims of copyright infringement.

Public Domain Music

An additional exception is if the music being played is in the public domain. The National Association for Music Education explains that such songs are no longer protected by copyright law, and a license would not be required to stream or perform the music in a store or business.

For music to be in the public domain, one of the following conditions must be met:

The rights to the music must have expired, and were not renewed by the artist’s estate or publisher.
The creator of the music explicitly put the music into the public domain.

The burden is on the business owner to ensure that the desired music to perform or play is in the public domain. This can be done by searching the online databases of PROs, contacting them directly, or retaining the services of an entertainment lawyer to make that determination.

As a rule of thumb, the intention to play licensed music should always be followed by the purchase of a license. The exposure to risk of copyright violation, legal action, financial damages, and loss of reputation is substantial.

What Happens if You Break In-store Music Laws?

U.S. copyright laws allow the person who holds the copyright to file a lawsuit against someone who plays music without permission. In this case, the copyright holder can ask for fees to cover their actual losses, or they can ask for fines as specified within the law.

Per the law, playing just one song without permission can allow the copyright holder to ask for fines of not less than $750 and not more than $30,000. If the court finds that someone willfully played songs without permission, an extra fine of not more than $150,000 can be added to the total.

PROs often send letters to businesses caught playing music without a license. In these letters, business owners are encouraged to sign up for a license to avoid legal action. However, these letters can go unread, and if they are, the PROs head to court.

For example, a bar in San Francisco had a license with a PRO that wasn’t renewed. The facility kept playing music, however, and the PRO filed a lawsuit for $30,000 in damages (per song), as well as legal fees. The case is still working its way through the courts.

In a similar case filed in 2024 in Reno, a karaoke bar was hit with a lawsuit. The owners thought the music they were playing was protected, but the PRO disagreed. The PRO’s representative said they hoped to settle with the bar owners, perhaps by encouraging them to get and keep a license, but those talks were still ongoing.