Retail stores often play background music to keep their customers in a good mood, but how does this work? You need to license these songs to play them in the background at your business. Learn how Pandora CloudCover can help.
Small business owners just like you want their customers to have the best possible experience in their stores, and this means creating the right atmosphere. One of the simplest and most effective ways to create this atmosphere is by playing music.
Unfortunately, playing music in your business is not as simple as finding the right playlist on a personal music streaming service like Spotify or Pandora. You cannot properly use individual or personal streaming services for this, even if you pay a monthly subscription. These personal use apps don't have the right music licenses for business background music.
Too many small business owners do not know this and end up paying hefty fines to the performing rights organizations (PROs) that manage those licenses.
We offer a simpler, more affordable solution: fully licensed music for your business at a fraction of the cost of securing licenses on your own OR getting caught without proper licensing.
Benefits of Background Music for Retail Stores
Background music carries a wide variety of benefits for retail stores. Here are a few of them:
- Improve the mood: The right music can help your customers feel comfortable inside your shop. When they feel good, they’re more likely to enjoy their experience (and tell their friends and family about it).
- Increase dwell time: Happy customers stay inside shops longer instead of darting out to escape music they don’t like.
- Higher sales volume: Customers who are in a good mood and lingering are likely to spend more money.
Understand Copyright Law
Per copyright law, the owner of the copyright has the exclusive rights to reproduce, publicly perform, distribute the work, and collect fees/royalties from others for doing so.
Playing music in a retail store qualifies as a public performance, which requires licensing such rights, usually from a PRO.
Organizations like ASCAP and BMI may choose to file a lawsuit against a business that plays music without licenses. For example, in 2019, ASCAP filed 13 separate lawsuits against bars and restaurants in the United States. In a press release about the action, ASCAP named every one of these restaurants.
Getting slapped with a lawsuit (and getting named in a press release) could be really bad for your business and your reputation.
Are There Exceptions?
Copyright law is strict, but there are some exceptions that could allow retail stores to play music without a license.
Retail environments that don’t serve food or drink may be able to play commercial AM/FM radio subject to certain restrictions, like:
- Music is played on six speakers or fewer
- No more than four loudspeakers are in any one room
What Happens if I'm Caught Streaming Music?
First, it is important to understand why you cannot use personal accounts offered by Spotify, Pandora, YouTube, Google Play, Apple Music, or similar streaming services in your business.
When you sign up for a standard monthly subscription or pay for individual songs, you have legal access to this music whenever you want to listen to it for private use. This means listening through headphones, listening at home or in your car, or playing music for friends.
Playing background music for customers in your business is usually considered a public performance of that song, not a private performance. A public performance usually involves playing a song to an audience, especially one that might financially benefit the person playing the song.
Playing music in your business can impact the thoughts and feelings of your customers for the better, so they might spend more money there.
Performing Rights Organizations
A performing rights organization (PRO) like BMI, ASCAP, SESAC, SOCAN, GMR, or others have representatives who may (and do) randomly go to businesses just like yours and listen to soundtracks that might be playing. They then determine if that business has signed a contract with the PRO for necessary public performance rights in the business. If not, you could be fined thousands of dollars for the mistake.
Copyright law provides that a fine for illegally playing music could be anywhere from $750 for the first offense to $150,000 for repeated or multiple offenses.
PROs are authorized to issue music public performance licenses. They are empowered to negotiate contracts with business owners like you to license the right to play certain songs in such PRO’s catalog.
PROs also work with streaming services like Spotify and Pandora to license rights to stream music for private use. These services’ personal use accounts do not include licenses to play background music in your business.
Once you negotiate a contract with a PRO, you will usually be asked to pay a monthly or annual fee to access that PRO’s catalog. The three biggest PROs — BMI, ASCAP, and SESAC — each work with thousands of musical artists and have large catalogs.
You may get some great music with one contract with one PRO, but the music you want might is likely written by multiple songwriters and licensed via multiple PROs. Larger businesses usually pay for multiple contracts with several PROs, but as a small business, this might not be possible for you.
What Do I Need to Be Able to Play Music in My Store?
To play chosen music (not the radio) in your store, you need several pieces of equipment and at least one contract. The items you need may include:
- A license: You need proper public performance licenses to play background music inside your store. You can get that through a licensing relationship with a PRO or through a background music provider, such as Pandora CloudCover.
- A receiver: This device connects to your background music provider or your properly licensed music source, enabling music to play.
- Speakers: These connect to your receiver and allow your customers to hear the songs you chose.
How Much Does a License to Play Music in Your Business Cost?
PROs can negotiate changes to contracts with you to meet your needs better, but those contracts can still be expensive. If you need multiple contracts with multiple PROs, you might end up paying more than you can afford, just to get access to certain songs.
This comparison table can help you understand estimated prices from the three largest PROs, along with the artists they share:
How to Negotiate Contracts with PROs
To appropriately play background music in stores, one option is to secure licensing directly from PROs. Here's how to do it:
- Contact the PRO with the information provided above.
- Provide details, such as the size of your shop, its location, and how many customers you serve every day.
- Review the contract sent by the PRO and ensure it meets your needs.
- Sign the contract, and pay the associated fees.
In most cases, you’ll have an opportunity to negotiate with the PRO. These negotiations can be delicate, but following a few suggestions might help.
- Be honest. Some PROs provide lower prices to organizations that serve few customers. While it’s tempting to lie, if you’re caught, you could get fined.
- Be specific. Outline how many hours you’re open, how many customers you serve every day, and how long people stay. These details could lower your costs.
- Be flexible. You could save money for things like long-term contracts, bundling, and more. Ask about all of the options before you sign.
- Be prepared. If one PRO won’t negotiate for a better price, another might be willing to do so, but remember that they represent different songwriters and publishers.
Know that a relationship with one PRO doesn't mean you can safely play every song. For true protection and the ability to play anything you want, you'll need licenses from all of the PROs.
Common Misconceptions About Music Licensing in Business
While most business owners understand that they should play music in stores, many have misconceptions about how to do so appropriately. These are the issues that seem to cause the most confusion:
Personal Streaming Accounts Can Be Used for Background Music in a Store
Many small business owners believe they can use a personal streaming account to play music in stores. Unfortunately, that’s not the case.
Consider Pandora's personal account terms:
“Subject to the terms and conditions of this Agreement and your payment of any required fees (if applicable), Pandora hereby grants to you a limited, revocable, non-exclusive, non-transferable, non-sublicensable license to access the Services in an Authorized Jurisdiction, and otherwise view and use the Services to the extent permitted by its intended functionality, for your own individual, personal, non-commercial purposes only and not for the sublicense to or use by third parties.”
If you log into your personal account and play it as a business soundtrack, you’re violating the terms, and Pandora could terminate your account.
One Relationship Covers All Songs
Most artists work with multiple songwriters. Some songwriters are covered by one PRO, and other songwriters choose a different PRO. Many artists and writers even change PRO affiliation within their career, meaning early songs may require one type of license and later versions involve working with a different company/license.
A license with one PRO provides you with the legal rights to play shares of a song within that organization’s library. That license doesn’t protect songs (or even portions of songs) managed by other PROs.
No One Monitors These Rules
You may believe no one will pay attention to what you do inside your store. In reality, PROs care deeply about people playing music without a license.
The Texas Music Office points out that PROs routinely send staff to unlicensed establishments to listen for protected songs. If they hear them, they can sue for damages ranging from $750 to $150,000 per song played.
Pandora CloudCover Plans
All this might seem complicated, and you might be worried about how much time and money this process costs. Fortunately, there are now options to stream music in your business without worrying whether you have the right license.
Pandora CloudCover is dedicated to managing business licensing for music, so you do not have to. All you have to worry about is getting great playlists for your customers.
Pandora CloudCover has three plans:
- Music: This is the most basic plan, starting at $16.95 per month (when prepaid annually) after a 14-day free trial. You can get Pandora CloudCover's curated playlists, or you can create your own custom mixes, including removing songs from playlists you like otherwise. You can also schedule music through the interface to play at certain times of day.
- Manage: If your business has multiple locations, this addition to the basic plan helps you play different playlists in different stores, so your employees and your customers do not hear the same songs on repeat. This starts at $21.50 per month (when prepaid annually), after a 14-day free trial.
- Messaging: This third addition to the basic plan starts at $26.95 per month (when prepaid annually), with a free 14-day trial to see if you like it. You can create your own personalized messaging that will play in your store, to keep your customers up-to-date on offers, upcoming events, and other interesting information. This plan allows you to intersperse this messaging into your playlists, so everything flows seamlessly.
You do not have to worry about huge fines or not getting access to the music you want when you sign up with Pandora CloudCover. We work with major PROs to get access to the latest hits, the greatest classics, and brand-new unknowns. With an easy-to-use interface just like streaming services you are used to, it will be easy for you to find and create great playlists for your customers, resting easy that the artists are being paid appropriately for their work too.
Frequently Asked Questions
These are the questions we often hear about playing music in stores:
Is it less expensive to work directly with a PRO than a company like Pandora CloudCover?
No. A relationship with one PRO won’t give you full protection to play any music you want. Typically, people need relationships with all of the PROs, and each one can be very expensive. A company like Pandora CloudCover can save you money and allow you to play music from multiple PROs.
With a license to play music in stores, can I use that account for other purposes too?
Not unless your contract specifically allows it. Most contracts explain how you can and can’t use the licensed music. A license limited to background music for businesses won’t cover other applications, such as social media videos.
Do I need a license if I’m playing CDs I purchased?
Yes. When you play the tunes inside a public space (like your store), it’s likely a public performance and subject to copyright law. Whether or not you paid for the CD doesn’t change the fact that you’re playing the music in public, which requires additional licensing.
Are there exemptions where I don’t need a license to play music in my retail store?
Maybe. If your retail environment is smaller than 2,000 square feet and you play the radio through a device that you’d use at home (like a simple stereo receiver), you may need a license. If your retail environment is larger, you can play AM/FM radio through six or fewer speakers with no more than four in one area. You can also play original music that you’ve written without a license.
How long does a license last and what are the renewal requirements?
It depends, as PROs and background music providers have different licenses and agreements. Ensure that you read your contract carefully and understand the terms.
References
Stores Are Misusing Background Music and It’s Costing the Record Industry Billions. (August 2020). Rolling Stone.
Playing Music in Your Store: How to Avoid Paying for It! NOLO.
Music to Match Your Business Goals. Pandora CloudCover.
Control Your Locations from Anywhere. Pandora CloudCover.
Drive Sales With In-Store Messaging. Pandora CloudCover.
Services Terms of Use. (April 2024). Pandora.
Second Opinion. JustAnswer.
Music Users. BMI.
Frequently Asked Questions. ASCAP.
Frequently Asked Questions. SESAC
Copyright. Cornell Law School.
Venues Refuse to Pay Songwriters While Profiting from Their Music. (February 2019). ASCAP.
Music Licensing for Your Business. (February 2024). Texas Music Office.
Are Music Licenses a Scam? (February 2024). Austin Area Chamber of Commerce.
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