If you are a business owner, it is important to understand how to legally play music inside your establishment. Without the right licensing, you could receive a letter from a PRO’s legal department demanding appropriate compensation. PROs like BMI, ASCAP, and SESAC are legally allowed to send these letters of demand.

If you receive a letter from BMI, ASCAP, SESAC, or another PRO, you may be required to pay a fine or respond with information on how you are legally playing music licensed by that organization.

Want to avoid dealing with PRO claims altogether? Try Pandora CloudCover. We handle licensing so business owners don't have to worry and can get back to running their businesses. Explore business music streaming options today.

What Happens When Music Is Not Appropriately Licensed for Business Use?

Some businesses have misused music at their establishments without the necessary licensing – usually by accident – and have been contacted by the PROs. The major organizations like BMI (which stands for Broadcast Music, Inc.), ASCAP, and SESAC send investigators out across the United States to listen to music played in any commercial setting and determine if the store owner has the necessary music licensing in place.

A music copyright law violation can cost up to hundreds of thousands of dollars in fines, legal fees, and penalties to the business. The cost of a fine from one PRO could be enough to force a business owner to close their doors.

There are some minor exceptions to copyright laws that allow very small businesses to play music in their stores. These are often considered situations where the business may replicate a home environment in some ways.

The homestyle exemption may be in play if one small radio or television is playing whatever is broadcast from that station, or if music is played at a very low volume, intended only for employees’ entertainment.

If you’re a small business owner, it can be beneficial for you to play music in your storefront, restaurant, or club – not just for your employees’ entertainment, but for your patrons as well.

However, you cannot plug in your smartphone to a small speaker, and use a personal music account for background music.

Until very recently, most business owners had to contact PROs to purchase general licenses or blanket licenses that covered their use of a PRO’s catalogue for a specific amount of time. After that licensing contract expired, the business owner would have to re-up it or decide not to use that catalogue anymore.

Typically, to have access to popular music or a wide range of appropriate music, business owners had to purchase licenses from several PROs. If you do not secure appropriate licenses to play commercial music for business, your first indication that you must pay a PRO like BMI, ASCAP, or SESAC, is usually receiving a letter in the mail.

Why Did I Receive a Letter From BMI, ASCAP, or SESAC?

If you received a letter from BMI, ASCAP, SESAC, or another PRO about licensing fees, chances are that an agent from that PRO entered your business to listen to the songs you played. If the agent determined that you played songs from the PRO’s catalogue without negotiating the right licenses or contracts,  you will likely receive a letter informing you that you have violated music performance laws in the United States.

The first letter likely will ask for licensing fees and inform you of the best way to negotiate a contract with the PRO, so this violation does not occur again. If you fail to, or refuse to, respond, you likely will receive further letters, potentially including financial penalties for their claim that you're continuing to violate music copyright laws, and you may eventually be taken to court.

You should respond to the PRO right away when you receive a letter. This may require finding legal counsel regarding intellectual property to help you draft a response. However, you may also be able to use the PRO's website to sign up for their services and begin negotiating a contract to license their music library.

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Is This Legal & Do I Have to Pay?

You may argue that you didn’t know about this aspect of music copyright and personal streaming servic limitations. Unfortunately, this doesn't influence whether you must pay a PRO. PROs are well within their rights to legally pursue you if you publicly perform their music without a license to do so.

Major PROs will not hesitate to send you letters and may even take you to court. One article reported that, in 2016, ASCAP alone filed 10 lawsuits against bars and restaurants for unauthorized use of its songs and other copyrighted musical works. This article notes ASCAP claimed that it had, over the past two years before the filings, made attempts to license music with these venues, which had refused to negotiate contracts and pay licensing fees.

In some cases, you may receive a letter about licensing from a PRO when you already have legal rights to play the song. This is rare, but you would then need to prove that you have the rights to play that music in your business.

PROs sometimes have overlap in which songs are in their catalogues, as most songs have multiple songwriters who may be represented by different PROs. You may pay one PRO for a song or only a portion of music rights for a single song and would need to license the other portion for another PRO. In this case, respond to the letter with proof that you have a contract with the necessary PRO representing the music you played.

Q: Can I negotiate or dispute the amount in the notice?
A: Maybe. Often, there is room to negotiate, depending on size of business, usage, whether you can show evidence of compliance, past usage, etc. You should respond promptly, provide documentation, and sometimes a PRO will choose to work out a settlement with you, if necessary.

If you use a commercial streaming service like Cloud Cover Music, you should also provide information on working with us to stream songs in your business. CCM negotiates contracts with major and minor PROs in the United States and Canada, so you can legally stream music in your business without directly negotiating expensive contracts with a performing rights organization.

What You Can Do When You Get a Letter From SESAC, ASCAP, or BMI

If you have received this letter, it usually means the PRO is claiming you are using its music without a license. Unless you have evidence to the contrary, such as a license through an existing account or a commercial-specific music streaming subscription, you must pay the fine.

If you feel a representative from BMI, SESAC, or ASCAP has made an inaccurate statement about your business’ music use, you could:

• Prove that you are adhering to the limitations of your commercial music streaming for business service’s terms of service.
• Show your license information from the PRO you work with.
• Demonstrate that an exemption applies.

There are other approaches to managing the fees imposed by PROs.

• Double-check the maximum occupancy of your business with the fire marshal since that is one part of the equation.
• Be sure to license the music used for live events like karaoke nights or DJs appropriately (not covered by a personal music account or background music account). As the venue owner, you are responsible for this process.
• Ask bands performing in your establishment to avoid playing covers of existing songs.
• Determine how a cover charge for live events may impact the license cost or fee.
• Consider getting a jukebox so patrons can manage their own music preferences.

How Pandora CloudCover Helps You Handle PRO Letters

Pandora CloudCover has the tools, resources, and expertise to help you prove compliance and reduce licensing confusion. This table helps you understand our approach at a glance. 

Sample Wording to Use in a Response to a PRO

If you’re working with Pandora CloudCover and get a letter from a PRO, don’t panic. You can try using the following language in your response letter. 

“Greetings: 

Thank you for your letter dated <<date>>. Please note that I believe I have the appropriate music licenses to play background music in my business, located at <<address>>.

‍I have a subscription with Pandora CloudCover, which should include the necessary public performance license. I’ve included copies of my service agreement and latest invoice. I also have a window cling on my storefront (see photo) that demonstrates my compliance. 

Please acknowledge receipt of these documents, and please direct your agents to the window cling on my storefront."

Why This Matters & What It Doesn’t Cover

PRO representatives need proof that you have a valid license to play music inside your storefront. A window cling may satisfy their needs, but some may feel the need (and they are entitled to ask even w) about your licensing status for their repertoire. If you are sent a letter, a quick response with additional documents should solve the problem. 

Note that the steps we’ve outlined here only apply to background music played through Pandora CloudCover. If you’re using music for live performances, karaoke, or other forms that aren’t background music, you need a different type of license. 

Small Business Music Licensing Solutions

With the advent of music streaming services, the way people want to listen to music is changing. They have more access to a wider catalogue, allowing them to find music they loved years ago, discover new music, or create playlists for any occasion.

Popular personal streaming services like Spotify, YouTube, Google Play, and Apple Music can be used in a private setting, but you cannot use these services to stream background music in your business.

When you are setting up a retail sound system in your business, you have some options to play music without paying expensive royalties to BMI, ASCAP, or SESAC. For example, you can limit yourself to royalty-free, public domain, or copyright-free music.

You can also find a commercial music streaming service that manages licenses with PROs on your behalf, like Pandora CloudCover.

Pandora CloudCover gives you the functionality of a personal streaming service, but appropriately licensed as background music for your business. We have curated playlists, the option to edit and combine playlists, and the ability to pre-program music using a calendar function. With some Pandora CloudCover subscription options, you can also insert your own in-store messaging as well as program playlists for multiple stores.

Frequently Asked Questions

Do I really have to pay fines if I didn’t know I was breaking the rules?

Unfortunately, yes. If you’re playing music without all proper licenses, you are likely subject to fines and possible lawsuits. The PRO may be willing to negotiate with you, but you can’t claim ignorance and/or ignore the problem, if you are using their repertoire (or even just one song from it) without a license.

What kind of proof can I present to show I’m licensed and compliant?

Signed contracts and paid invoices are exceptional forms of proof to start with if a PRO sends you a letter. 

How long do I have to respond to the PRO?

It depends. The demand letter from the PRO should include information about when you’re required to respond. 

What if part of the music I played was not through Pandora CloudCover?

You can speak directly to the PRO or the entity that is claiming you are using their repertoire without a license. It’s likely you’ll be asked to pay a fine or some type of compensation for using their repertoire without a proper license if they can demonstrate that.

How much can fines or royalties cost if there is a violation?

Fines and penalties can vary, but they typically start at $750 per violation. In some cases, they can rise to $150,000 per violation.

References

5 Things to Know: My Business Got a Letter From ASCAP/BMI/SESAC. (June 20, 2016). Soundstr.

ASCAP, BMI and SESAC Force Local Coffee Shop to Shut Down Live Music. (October 29, 2014). Digital Music News.

When Should a Small Business Pay ASCAP for BMI? (October 13, 2011). The Palo Alto Area Bar Association.

I’ve Been Contacted by a Representative of ASCAP, BMI, or SESAC and They’re Getting Aggressive. What Should I Do? Rockbot Support.

How to Reduce Your Licensing Fees to the PROs. (June 15, 2015). Entertainment Attorney Blog.

The Music-Copyright Enforcers. (August 2010). The New York Times.

ASCAP Sues 10 Venues that Refuse to Pay to Use Music. (April 2016). HypeBot.com.

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