Performing rights organizations (PROs) typically 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 catalogue.
PROs typically create individual monthly or annual fees in a contract based on your type and size of business, which can take time 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 Cloud Cover Music 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.
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 performing rights organizations (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 dozens 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 who are managed by member artists, so these artists’ intellectual property interests are appropriately represented.
ASCAP: This is the oldest PRO in the US. They have 550,000 members and over 10 million songs available in their catalogue. Artist and publisher membership is $50, but ASCAP reports to have distributed $918 million to all members in 2016, 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
- Dance schools
- Festivals and special events
Each contract will have a separate rate schedule that helps to determine how much the licensee pays per month to access ASCAP’s catalogue. 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.
BMI: This is the largest PRO, representing 750,000 artists and 12 million songs. The membership fee for songwriters is free. It’s $150 for individual publishers, and $250 for publishing companies.
In 2016, BMI distributed $931 million to all their artists. BMI offers licenses to music.
- Public Performing License: This allows the licensee to perform the work in public or transmit the work to the public.
- Mechanical License: This grants the right to the licensee to re-print and distribute a specific composition at an agreed-upon fee.
- Synchronization License: This allows the composition to be used by the licensee in a synchronized way over other visual images, like an advertisement or a music video.
- Digital Performing Right in Sound Recordings: This covers licenses for digital streaming services
A license with BMI can range from $250 to $400 per year, but larger businesses might pay upward of $2,000 per year.
SESAC: Although this organization is the only for-profit PRO in the big three, it is still managed by member artists, and it represents 400,000 musical works from 30,000 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.
There are also several smaller PROs, including these:
- Global Music Rights (GMR)
- The Harry Fox Agency (HFA)
- Music Reports (MRI)
- The Mechanical Licensing Collective (MLC)
Types & Cost of Different Licenses
Depending on your business, each PRO might negotiate a contract for a license.
- Custom Digital Phonorecord Delivery (DPD) License: This allows downloadable audio files online for $18.20 for 250 units, minimum.
- Custom Mechanical License: This allows for recording a song onto physical media like a tape, record, or CD, with a starting rate of $0.091 per song copy.
- Slide Projection/Overhead Transparency/PowerPoint Lyric Display: This covers situations where song lyrics are printed on a permanent slide or digital file and used in a presentation, starting at $20 per 500 viewers.
- Non-Commercial Videogram Synchronization License: This involves using a song in a video or “on-screen performance,” starting at $0.25 per copy with a minimum license amount of $25 per license.
- Commercial Mechanical License: This covers making a new physical recording like a CD or tape of songs that can be sold at the expense of the recording company, with no starting number, but individual negotiation with PROs is required.
- TV Synchronization License: This covers broadcasts like those on ABC, NBC, ESPN, or other TV stations, for a negotiable one-time fee.
- Internet Performance License: This covers using songs in online videos or for an online live-streamed performance, starting at $50 per license that lasts for three to six months, initially.
If you are concerned about the potential cost of each music license you negotiate with a PRO, you can use music in the public domain, or you can use music published under the Creative Commons license, as long as the artist has specified there is a commercial use.
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, but negotiating with a PRO can become expensive and complex. Fortunately, commercial music streaming services like Cloud Cover Music now offer the convenience of a consumer streaming service like YouTube or Spotify while covering your business license with most 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.
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.
Types of Copyright. BMI.
How Much Does a BMI License Cost? (September 2020). SoundMachine.
Licensing FAQs. SESAC.
SESAC: Licensing, Fines, Laws, and More. Cloud Cover Music.
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.