SESAC: Licensing, Fines, Laws, and More

While the other two major PROs are nonprofit organizations, SESAC is for-profit. It also negotiates contracts with businesses like yours differently than the other PROs.

We’ve outlined how to work with SESAC to play music in your business, avoid fines, and navigate other ways that SESAC protects its artists.

The Ins & Outs of SESAC

SESAC was founded in the 1930s, according to the organization's website, and at the company's founding, it focused on works that were published by European firms. Over time, that focus shifted to include American publishers.

Now, the company works with a variety of artists, such as these:

• The Avett Brothers
• Bob Dylan
• Neil Diamond
• Mumford & Sons
• RUSH
• Adele

SESAC works a little like an intermediary for the artists it serves. The artists form an agreement with SESAC, and the organization enforces copyright on the artist’s behalf. Money brought in is distributed to the artists.

Unlike other PROs, SESAC pays royalties monthly, according to the company's website. That could make a big difference to a new artist who is living paycheck to paycheck. When those checks come quarterly, as they do with other PROs, it can be difficult to make ends meet.

How Does SESAC Operate?

SESAC can also be differentiated from other PROs by its business setup. This is one of the only PROs that operates on a for-profit basis, according to Royalty Exchange.

That for-profit status could make this company slightly more aggressive about getting fees for protected music, as the company must pull in money to remain profitable. Nonprofit PROs may not have this same drive.

SESAC’s website makes it easy to sign up with them to get licensed music for any purpose, including to play in your business. You can even pay through their website, so the process is streamlined with you, the customer, in mind.

What Does It Cost?

As a PRO, SESAC holds enforcement rights for each copyright it's connected to. Each time a protected piece of music is played, SESAC expects to collect a fee. A portion of that fee is distributed to the composers, songwriters, and publishers associated with that piece of music.

SESAC recommends that business owners contact the company directly to understand the fees that are required, as each contract can be a little bit different.

This is good for your business, as negotiating with SESAC gives you some flexibility over what works best for you. However, it also means you could end up paying a lot more than you expect based on what SESAC reports on their website.

Additionally, PROs like SESAC do not collaborate with each other. If SESAC does not have the music you want, you must find the PRO that manages it and pay for them separately.

The National Restaurant Association reports that all PROs have searchable databases available online, but each website includes a disclaimer about accuracy. The lists may not be exhaustive, they say, and they will not protect you from infringement.

What Happens if You Don't Pay?

Playing SESAC music without an agreement in place is risky. Representatives from the organization can visit your facility unannounced, and when they arrive, they can demand that you sign a contract and pay a fine upfront.

SESAC may also send letters that explain the need for a contract and a fine, and sometimes, those letters can seem threatening. Small business owners often take to the internet to share their stories about the letters they've received and how they plan to respond to them.

One such business owner, who writes on Mike's Blog, reported that he received several letters from SESAC, each containing payment envelopes, that suggested that his use of music in his business is in violation of copyright laws. The author of this blog posted a copy of the letter, and it seems tame. It's important to also note that PROs like SESAC will not contact you by email or phone, only through physical mail.

The law states that the owner of the copyright has the absolute right to defend against infringement. All that SESAC must do, under the law, is prove their ability to enforce the copyright. The person who infringed on that copyright must make the transgression good, either through agreeing to stop infringing or by paying damages. Those damages can range from $750 to more than $30,000 per infringement, under copyright law.

These fees can really add up, and they can be compounded in the courtroom. The National Funeral Directors Association reports on a case of a business that was asked to pay SESAC $1.2 million, and the business was also asked to pay attorney's fees for SESAC, which reached $500,000.

Alternatives to SESAC

Without knowing upfront how much you will pay to access SESAC’s catalogue, you may begin to search for alternatives to this service. Some options include:

1. Using public domain music.
2. Using royalty-free music, which you pay for once and then can use in any setting.
3. Using music with a Creative Commons license, which often requires no payment.
4. Using another PRO, like BMI or ASCAP, or a smaller PRO like GMR.

There are downsides to all these alternatives, of course. For example, you will need to spend a lot of time researching royalty-free, public domain, or Creative Commons music to ensure you are getting the right songs for your business without violating intellectual property laws.

Other PROs like BMI or ASCAP are nonprofit organizations, but you still have to pay a monthly or yearly fee to access their catalogues. In some cases, none of these options may have the songs you want.

Fortunately, streaming services know that you want access to the most music possible without worrying about different types of licensing, which can be complicated. Companies like Cloud Cover Music work like music streaming services but manage the licensing process for you.

Making Sense of Complicated Laws

Copyright laws can be complicated and difficult to understand, and the consequences to your business for violating a law could be severe. It's just not safe to throw the letters away and hope you won't get caught. It's also not wise to cut off all music within your small business.

At Cloud Cover Music, we make it easy. We have relationships with ASCAP, BMI and GMR, so you won't get nasty letters or phone calls for playing the music your customers want. With one fee, you'll have copyrights for three organizations covered. It's just that easy.

We also have extensive playlist options, so you can find the right music for business for your unique small business. We won't force you to stick with one set of artists or one type of music. We can provide you with the selection you need to help your company thrive.

Contact us to find out more about how to get started, and we'll explain everything you need to know.