To understand music licensing, start with performing rights organizations (PROs) like ASCAP, BMI, and SESAC. These organizations manage licenses for songwriters and publishers, allowing businesses to legally play their music. For most business owners, this means negotiating licenses and paying fees based on factors like business type, size, and music usage. 

Music licenses through these major PROs range from $250-$2,000/per year for public performance licenses, while those who want to make an advertisement using a song could pay up to $50,000 for a synchronization license. PROs tend to base their music licensing costs on factors like the size of your company, your potential audience, and more. Managing multiple licenses with different PROs can quickly become expensive and time-consuming.

Fortunately, commercial music streaming services like Pandora CloudCover can help you get legal access to thousands of songs and curated playlists, without navigating licensing with PROs. And for a fraction of the cost. Simplify your music management, stay compliant, and create the perfect ambiance for your space.

What Is a Music License? Why Do I Need One?

You want to play background music in your business since there are many mental and emotional benefits of music. However, as the business owner, you cannot simply bring in an MP3 player and play your personal music collection over the loudspeaker in your building or office.

Since the music you play is considered a public performance, even of the recording, you need to acquire a different type of license to legally play songs in this situation.

Fines

If you play a song without a required license and are caught, the consequences can be severe and include fines.

Per copyright law, an award of statutory damages can be not less than $750 or more than $30,000, as the court considers just. If the copyright owner can prove that the infringement was committed willfully, the court can increase statutory damages to a sum not more than $150,000.‍

One nightclub owner in Mississippi was sued for unpaid license fees in 2019. In the lawsuit, the copyright holder claimed the owner owed more than $6,850 in fees, which included licenses, late charges, and attorneys’ fees. The business owner told reporters he had no idea how to pay this bill. 

How to Get Licensed Music

Music licensing can be managed by the individual musician or composer, or by the music publishing company, but most often, music licenses for public performances are distributed by PROs.

A PRO manages intellectual property rights for multiple musicians, songwriters, and other rights holders while providing access to a large catalog of different songs to the public, including businesses like radio and television stations, film production companies, restaurants, and spas.

We’ve outlined some PROs, the licenses they offer, and the cost of those licenses.

Big 3 PROs

Although there are a number of PROs operating in the United States and internationally, there are three large PROs that manage the most popular music of the last several decades. These are generally organizations that are managed by member artists, so these artists’ intellectual property interests are appropriately represented.

The licensing fees and terms with each of these PROs can change regularly, so it’s important to contact each PRO directly for the latest fees and terms.

ASCAP

ASCAP is the oldest PRO in the US. They have 960,000 members and over 19 million songs available in their catalog. First-time membership to ASCAP is free for all writers. Publisher membership is $50, but if you join as both a writer and publisher, the fee is waived. ASCAP reports to have distributed more than $1 billion to all members in 2022, showing this is also one of the most popular PROs.

The cost of a music license with ASCAP varies by business and situation. For example, ASCAP considers how many potential patrons will hear songs, how often the song might be played, and how the song is presented (audio, visual, or audiovisual). License types are typically divided into business type, such as:

• Bowling center
• Campground
• Dance schools
• Festivals and special events
• Radio

Each contract will have a separate rate schedule that helps to determine how much the licensee pays per month to access ASCAP’s catalog. One report, though, found that a couple were asked to pay $600 for a year-long ASCAP license, which could be too much for a small business. Check with ASCAP directly regarding the most up-to-date licensing fees and terms.

BMI

BMI is the largest PRO, representing more than 1.4 million artists and more than 22.4 million songs. The membership fee for songwriters and composers is $75. It’s $175 for individual publishers, $250 for publishing corporations or LLCs, and $500 for partnerships.

In 2016, BMI distributed $931 million to all their artists. BMI offers licenses to music. A license with BMI can cost about $365 a year, but larger businesses might pay upward of $10,000 per year. Check with BMI regarding the fees and terms on particular works.

SESAC

Although SESAC is the only for-profit PRO in the big three, it is still managed by member artists, and it represents more than 1.5 million musical works from more than 15,000 artists. Artists must be invited to join SESAC, but the group paid between $400 and $500 million to their member artists in 2016.

Like other PROs, SESAC considers the type and size of business in order to determine licensing fees, but these are generally more expensive, with $700 per year being the average price. Check with SESAC directly for specific fees and terms.

Types & Cost of Different Licenses

PROs offer many different types of licenses to meet the needs of their customers. Each one is a little different, and it’s important to understand the rules that pertain to the version you buy. If you purchase the wrong license for your use, you could be violating copyright laws. 

Common types of licenses include the following:

Public Performance License

This is the type of license most business owners need to play background music. This license allows a piece of recorded music (like a song you’ve heard on the radio) to play within a commercial environment. It’s sometimes called the digital performance right in sound recordings, and it’s preserved in copyright law. 

Mechanical Llicense

A mechanical license allows someone to create a new (or cover) version of a song. It also allows people to sample a song or reproduce it. If you want to record an album of cover songs to celebrate the opening of your business, you need this license. 

Synchronization Llicense

This type of license allows you to match a recorded song with an image. If you want to create an advertisement for your business with a popular song, this is the proper license.

Cost of Public Performance Licenses

PROs typically provide public performance licenses. This is the type of license most business owners need to play background music. 

This license allows a piece of recorded music (like a song you’ve heard on the radio) to play within a commercial environment. It’s sometimes called the digital performance right in sound recordings, and it’s preserved in copyright law. 

You will need a public performance license if you hope to use music in one of the following ways:

• Playing background music for customers
• Playing background music for employees
• Using music in an eating or drinking establishment 
• Playing music in a waiting room 
• Using music to entertain guests at a wedding reception or festival 
• Playing music at a sporting event

Most PROs base pricing on things like your potential audience, the size of your company, and more. But with a little research, you can determine how much these fees typically cost. This chart can help.

Estimate Potential Costs

Take these steps to calculate your potential license cost:

1. Determine your business type. Most PROs will ask you to classify your business. You can typically choose from categories like retail, restaurant, sporting arena, or bar. 
2. Measure your facility size. Determine where the music will play, and use a tape measure to determine how big the space is. The larger the area, the more costly the license might be. 
3. Estimate the listener size. Look through your records and determine how many people might hear the songs you play. 
4. Choose your PRO. Find a PRO that you’d like to work with, and contact that organization. Provide the information you’ve collected. ‍
5. Prepare to negotiate. Some PROs are willing to lower the cost of a license if you play the music in more than one location or agree to a longer contract term.

How to Get a License From a PRO 

Obtaining a public performance license from a PRO is a relatively quick and straightforward process. However, it’s one you may need to repeat several times. A license with one PRO won’t allow you to play songs managed by another PRO. For full coverage, you’ll need multiple licenses. 

Follow these steps to obtain a public performance license:

Determine Your Needs

‍Specify exactly how you’d like to use music in your business. Are you playing recorded music only? Will you have live bands? Are you hoping to use music in an advertisement? PROs will ask these questions, so it’s best to be prepared. 

Take Measurements

PROs often ask for the size of the space where music will play and how many people will hear it. Do your homework so you’re prepared with accurate data. 

Research PROs

‍If you already have an artist in mind, use YouTube to determine who holds the copyright, or pick up a physical recording (like a CD) to find out who represents that artist. 

Contact the PRO

‍Most PROs have customer service representatives available by phone. Call and explain who you are, how you want to use music, and who might hear it. 

Don’t Be Upsold

‍The sales staff may encourage you to broaden your music scope. For example, if you only need one song for an ad, they may try to entice you with a public performance license, too. Only buy what you need. 

Look for Discounts

‍When you’re given a quote, ask about money-saving steps you can take. Should you play music in a smaller area? Is there a lesser-known artist in the catalog who could charge less for a mechanical license? ‍

Sign and Pay

‍Once you’ve settled on a fee and contract, you can use the music as specified by the PRO. Remember to read your contract carefully and know what it covers. If you want to use music differently, you’ll need a new agreement.

Commercial Streaming Services to the Rescue

Using music from the public domain or Creative Commons may not give you access to the genres or specific songs you want for your business's background music, but negotiating with a PRO can become expensive and complex. Fortunately, commercial music streaming services like Pandora CloudCover now offer the convenience of a consumer streaming service like YouTube or Spotify while covering your business license with major PROs.

For one low monthly fee, you can use curated playlists or make your own playlist for your establishment, without worrying about which PRO manages the song. The interface is easy to use, so you can get started fast.

FAQs About Music Licensing Fees

These are some of the most common questions we hear about music licensing fees:

Do I need to pay a license fee to play music in my business?

In most cases, yes. Playing music in your business is considered a public performance, and you’ll need a license from at least one PRO to do so legally. You will be covered if you use a commercial music streaming service, like Pandora CloudCover.

Can I play the radio in my business without paying?

If your business is very small (smaller than 2,000 square feet) with a small number of speakers, you can potentially play the radio for free. If you have a large business with more than six speakers, you can’t play the radio for free. You may be better off choosing a business music streaming solution like Pandora CloudCover.

How do I get a music license?

You can contact the major PROs individually, such as BMI, ASCAP, and SESAC. You can also sign up with a commercial streaming service that handles these contracts and licenses for you. You cannot use an individual streaming service, such as standard Spotify, as this doesn’t cover commercial or business use.

How much is an average music licensing fee?

It depends on the work. Average music licensing fees can range from $250 to $400, but they can cost more than $2,000. It’s more financially feasible for businesses to subscribe to a commercial streaming service, such as Pandora CloudCover, which allows them to play a wide library of licensed music for as low as $16.95 per month (when prepaid annually).

References

ASCAP vs BMI vs SESAC: The Big Three, Who’s for Me? (July 017). Royalty Exchange.
Frequently Asked Questions. ASCAP Licensing.
ASCAP Music License Agreements and Reporting Forms. ASCAP Licensing.
ASCAP, BMI and SESAC Force Local Coffee Shop to Shut Down Live Music. (October 2014). Digital Music News.
About. BMI.
Types of Copyright. BMI.
Music Users. BMI.
How Much Does a BMI License Cost? (September 2020). SoundMachine.
Licensing FAQs. SESAC.
SESAC: Licensing, Fines, Laws, and More. Pandora CloudCover.
A Guide to Key Pay Sources in the United States: BMI, ASCAP, SESAC, GMR, HFA, MRI, the MLC. (October 2021). Songtrust.
Rates and Licenses. Music Services.