If you want to learn more about music licensing, you have to start with the PROs. Performing rights organizations (PROs) manage music licenses on behalf of their member artists and music publishers. If you are a business owner, you may need to negotiate and purchase a license with a PRO to use songs in their catalog.
PROs typically create individual monthly or annual fees in a contract based on your type and size of business, which can take time to negotiate and seem complicated. Individual licenses may not cover your use, so you may end up with multiple blanket licenses with multiple PROs.
Fortunately, commercial music streaming services like Pandora CloudCover can help you get legal access to thousands of songs, without navigating licensing with PROs.
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. Fines can range from $750 to $30,000 or more per song. If the court deems that you intentionally and willfully broke the law, the penalties will be more severe.
For example, 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 are distributed by PROs. A PRO manages intellectual property rights for multiple musicians, songwriters, and other rights holders while providing access to a large catalogue 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: This 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: This 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 range from $250 to $400 per year, but larger businesses might pay upward of $2,000 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 license.: 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 license:. 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.
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.
How to Get a License From a PRO
Obtaining a 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 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 to play in 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.
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, 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.
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.