Potential PRO Fines & Risks by Venue Size

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Why Businesses Must Use Licensed Music

A music license provides legal permission to play music protected by copyright. Without a license, each song you play could violate that copyright protection and entitle the holder of the copyright to sue you for damages.

Using a personal streaming service does not provide you with a business license, and 78% of small or mid-sized businesses in the United States mistakenly share music in this manner. Each one could face a lawsuit.

Statutory fines are set by law, but courts have a significant amount of latitude to determine the final settlement. In general, repeated and willful continuation of using music after a business is notified of a copyright problem will lead to higher fines.

PROs issue performance licenses, ensuring the music you play doesn’t violate copyright law performance rights. PROs can sue venues that don't have the necessary licenses.

PRO licenses can be expensive, but they’re not the only option. A business streaming service, like Pandora CloudCover, offers legal protection at a lower cost.

Q: Is there an alternative to seeking out PROs for licensed business music?
A: Yes. Business music streaming services, like Pandora CloudCover, work with PROs to offer licenses through a single monthly subscription. These services also come with business-friendly tools that make managing music easier.

Do PROs Set the Statutory Fine Amount?

PROs do not set statutory fines. The court system determines damages and appropriate fines based on evidence presented during a lawsuit.

However, PROs do use a variety of factors when setting their licensing fees, and it’s typical for PROs to ask businesses to pay for a license to avoid going to court with that PRO.

The main factors used in setting a PRO license cost include the following:

Type of business
Number of patrons
Size of venue
Number of speakers
Types of music used (such as live shows, karaoke, background, etc.)
Presence of a cover charge to enter the venue

The larger your venue, the more music types you need, and the more people you serve tend to translate into higher fees.

If you ignore demands to pay for licenses and you get caught, the size of your lawsuit settlement can vary by factors such as:

How many songs you were caught playing
How many times you’ve been contacted by the PRO about your use of music
How many times you’ve been sued for this issue in the past

Since the courts and juries have discretion in awarding damages, it's difficult to make a 100% accurate prediction of costs a company might face. Unfortunately, some companies ultimately find the costs so high it's easier to go out of business altogether.

Working with a business music streaming service like Pandora CloudCover is an inexpensive, smart way to avoid stress and expensive lawsuits for using unlicensed music.

Hypothetical Fine Scenarios

While it’s impossible to predict every fine someone might face for violating copyright, these examples could help to make the financial impact of a lawsuit easier to understand.

For these hypothetical examples, we’re using BMI’s typical fee structure and fines as outlined in U.S. copyright law.

Small Venue (Coffee Shop or Small Retail Store)

A very small coffee shop plays background music through just a few speakers to a crowd that’s never bigger than about 30 people. A PRO representative has proof that the business played one protected song two months ago.

The PRO sends a letter demanding two months of fees, totaling $350. The letter specifies that these fees solve the past violations, but the business needs proof of a license to keep playing music.

The owner pays the $350 and signs up with Pandora CloudCover for future music. This is the kind of matter which could be solved without a lawsuit.

Mid-Sized Venue (Restaurant)

A moderately sized restaurant plays music through several speakers to a crowd that could be 100 people. Most of the time, the music is in the background.

A PRO representative visited last week and has proof that the business has no license for five of the songs played. The PRO sends a letter demanding that the business pay a $700 license fee to cover this month.

The owner throws the letter away. The next month, the PRO sends notice of a lawsuit. The two parties go to court, and the PRO asks for relief in the form of $3,750. The court agrees, and the business owner must pay and provide proof of a license to use music going forward.

The owner pays the fine and signs up with Pandora CloudCover for future music.

Large Venue (Nightclub)

This large facility has multiple speakers and rooms, and the owner often hosts a crowd in the hundreds. A PRO representative has been to this venue multiple times and has proof that dozens of songs have been played with no license over a six-month period.

The PRO sends a letter asking for six months of retroactive licensing fees at $2,500. Rather than paying $15,000, the owner ignores the letter. The PRO sends three more such letters over the next three months. The owner ignores all of them.

The two go to court, where the PRO demonstrates that the owner has consistently ignored copyright law. The courts agree and assess a fine of $150,000 for willful violations. The venue goes bankrupt.

How You Can Mitigate Risks

Court cases can be both time-consuming and expensive. It’s smart to plan and avoid violating copyright laws. These are some options:

Get Licensing Through Relevant PROs

PROs offer licenses that come with the legal permission to publicly perform songs within that PRO’s catalog. Fees are typically assessed monthly, and your license can help you avoid a lawsuit and associated fines.

For full protection, you need a license through all PROs, and there are more than three of them. A legal relationship with one PRO doesn’t protect you from all PRO lawsuits.

Create a Music Strategy Before Making a Decision

PRO fees are assessed on a variety of factors, including your venue size and the way in which you want to use music. Ensure that you understand music’s role in your business before you sign up. If you change anything (including deciding to host DJs or adding a room), you will need a new license.

Use an Alternative Like Pandora CloudCover

A business music streaming service like Pandora CloudCover is a less expensive option for companies that want to share background music with their patrons. In addition to reasonable fees, music streaming services offer business-friendly tools (like dayparting) that make sharing music easier.

Example Business Checklist

Before you choose a final music partner, complete these steps:

Measure the size of the rooms where music will play.
Count the speakers you’ll use to play music.
Outline how many days per week you’ll play music.
Define how you’ll play music.
Identify the PROs that protect the songs you’d like to play.
Contact the PROs with this information and ask for a quote.
Contact a business streaming service like Pandora CloudCover for a comparison.
Keep proof of your license.
If you receive a demand letter, respond promptly.

Get Fully Licensed Business Music With Pandora CloudCover

Pandora CloudCover is your top choice for legal background music you can play inside your business. With one low monthly fee, you can stop worrying about lawsuits and fines for use of unlicensed music.

Pandora CloudCover also offers business-friendly tools (like dayparting and preprogrammed playlists) that PROs do not. Those tools are included in your monthly fee. Reach out to us today to learn more about what we can offer your business.