Artists, musicians, and publishers deserve fair compensation for their hard work. That’s why they protect their songs with copyright. To use the music legally, you must connect with the copyright holder for a license and pay a fee. 

Skipping licensing can lead to serious financial problems, including fines in the thousands for just one song. Your reputation can also be harmed when people hear you’ve been stealing music. 

Understanding licensing isn’t always easy, but there is another way. Companies like Pandora CloudCover negotiate a specific type of license for business owners looking to play background music. That means you can get the legal protection you need quickly and effectively by choosing Pandora CloudCover.

Why Are Music Licenses Needed for Businesses?

Music is more than just a soundtrack for your business. Researchers say the right songs can increase worker concentration, regulate customer emotions, and so much more. However, you can’t play any songs you like inside a commercial setting. 

Music is protected by the Copyright Law of the United States. Copyright holders (such as songwriters, musicians, and publishers) have the right to approve when and how their songs are used, and they are entitled to compensation for that use. 

Businesses need music licenses to play songs legally. If you don’t have a license, the copyright holder can take you to court for damages. Per copyright law, those fines can range from $750 to $150,000 per song. 

Playing music without a license also deprives the artists you love of a paycheck. They’re running businesses too. They deserve to be compensated for their hard work. 

6 Main Types of Music Licenses

Music licenses are designed to protect a specific usage of music. The type of license you’ll need depends on the manner in which you want to use the song you’ve chosen. This table can help you understand the differences at a glance:

Master License 

Of all of the music licenses available, the master license is the most wide-ranging (and the hardest to define). Essentially, this license gives you the ability to use a very specific (or “master”) recording of a song in a brand-new project. 

A master recording is typically defined as the first recording of a song. All later copies of that song come from this master. 

These licenses are somewhat rare, as artists and musicians are protective of their master recordings. To get a master license, you must negotiate directly with the copyright holder, which is typically a record company. 

Master recordings are popular for people who want to use one very specific song in a project. Ad agencies, for example, may lean on these licenses as they develop products for their clients. 

If the song is very popular, expect to pay thousands for a license for just one song. If the piece is less popular or the artist is relatively unknown, the price may go down. 

When You Might Need a Master License 

It’s rare for business owners to seek out master licenses. However, if you want to grab the guitar lick from Michael Jackson’s “Beat It” and use it in a commercial, you might need this type of license. Note that you may need a different kind of license to distribute it, so this isn’t a standalone solution. 

Mechanical License 

A mechanical license allows you to reproduce a song and distribute it in an audio-only format. 

With a mechanical license, you can remix an existing song into a new one you’re writing or producing. You can also make a cover of this song and make it sound more like your own. 

Artists who like to remix or cover songs made by others often need mechanical licenses. With them, they can distribute their work to the public. 

Licenses like this are handled by a mechanical license society (such as the Harry Fox Agency). Expect to pay a royalty rate of 10 to 20 cents per copy of songs you want to use. 

When You Might Need a Mechanical License

Business owners rarely need a mechanical license. However, if you want to record cover versions of popular Christmas songs in a video you’ll share with your clients, a mechanical license is needed. 

Print License 

A print license allows you to reproduce the sheet music for a particular song. With this license, you can’t do something like record the song or play it. However, you can use the notes and scores in printed form. 

Publishers often need a print license, as do music teachers. They want to highlight the structure of a piece by sharing its underlying composition. A print license makes this possible. 

The music publisher typically issues this type of license, but some artists (or their agents) handle the details themselves. Your total fee will depend on where the music will be shared and who might see it. 

When You Might Need a Print License

If you’d like to share sheet music images on your products (such as printing them on shirts or embedding the score into jewelry), you’ll need a print license to do so. 

Public Performance License 

When business owners look for licenses for music, they’re often searching for public performance licenses. With this type of license, you can play a recording of a song in a public place, such as a restaurant or retail outlet. 

Copyright holders use performing rights organizations (PROs) to manage these licenses. PROs base their fees on attributes like company type, potential audience, and facility size. Typically, they’re less than $100 per month. 

PROs also hire staff to monitor public performances. People may visit restaurants and other open spots to listen for protected music played by people with no licenses. If they spot violations, they may initiate lawsuits to collect fines. 

When You Might Need a Public Performance License

If you’re playing protected music inside your business, you will need a public performance license. If you get this license from one PRO, you must ensure that you’re only playing songs from that organization’s list. To play anything you want, you may need multiple PRO licenses. 

Synchronization License 

A synchronization license allows you to match (or “sync”) a piece of music with a piece of video. 

People who want to use music in products like streaming videos, online commercials, or video games often use this type of license to protect their work from lawsuits. 

Music publishers often issue sync licenses. The price can range from about $100 to several thousand, depending on the popularity of the song and the artist. 

When You Might Need a Sync License 

If you’re hoping to use music in something like a corporate presentation or slideshow, you’ll need a sync license to do so. You’ll also need this license to use music in an online ad for your business. 

Theatrical License 

A theatrical license allows you to use a protected piece of music in something like a play or theatrical performance. The license allows your theater company of actors and singers to perform the song live.

Theater producers often use these licenses to ensure their performances are legally protected. The people who perform the pieces, such as the singers, don’t need to get these licenses. 

Music publishers often issue theatrical licenses. They can cost just a few hundred to many thousands, depending on the song. 

When You Might Need a Theatrical License

If you own a theater or performance venue, you may need a theatrical license to allow your company to sing “Walking on the Moon” by the Police during a play you’re putting on for an audience.

New & Emerging Types of Music Licenses 

The music industry is changing every day, as are the ways in which people use music in their products. As a result, the music licensing system is changing. Several new types of licenses are now available, and some might be right for you. 

Section 114 Compulsory License

This type of license allows digital music companies (like SiriusXM and Pandora) to play songs without getting a license from every single rights holder. However, there is a hitch. 

This license covers only non-interactive digital transmissions. That means users can’t do things like make a playlist or specify a song to play. Instead, they can only play things the company has programmed. 

As a business owner, you won’t need this license. However, if you work with companies like Pandora CloudCover, your partner should have this license. 

Section 115 Compulsory License

This type of license is designed for the digital age. With it, someone can record and distribute a musical work, as long as it’s already been released to the public. 

With this license, someone can create CDs and streaming playlists. To get the license, a person must make a connection with the Mechanical Licensing Collective and pay a fee. The license isn’t transferrable. 

Again, business owners rarely need this kind of license. But it’s important for you to know about it and how it works. 

Creative Commons License

Creative Commons is a new form of copyright. Artists can choose from several different types of licenses. Some allow businesses to use music in an unlimited manner, while others come with restrictions on things like remixing and attribution. 

Most songs protected in this way are available for download with Creative Commons rules clearly stated. You must read them carefully before you use the song. 

Some business owners use songs protected in this manner in small projects, such as online ads. 

Blanket Licenses 

With a blanket license, a radio station, TV network, streaming platform, or even a restaurant can play any of the works in a PRO's catalog at any time. 

The fee for a blanket license is usually based on factors like audience size, revenue, or usage level, and it provides the licensee with broad legal coverage and ease of use. 

In return, the PRO collects royalties and distributes them to the copyright holders based on usage data and proprietary formulas.

These licenses are very similar to public performance licenses (which we covered earlier). However, they can also be purchased by radio stations, which is what makes them a little different. 

Royalty-Free Sounds

While this is not a license per se, this approach to distributing intellectual property is still protected by U.S. law. 

The musician or composer can either waive their right to make money from the work or they can ask for upfront payment and waive their right to additional compensation associated with any reproductions or presentations of the work.

There is no comprehensive database of all royalty-free music. To use this approach, you must carefully research every song before it starts to play. 

An Alternative to Traditional Music Licensing 

Understanding music licensing isn’t easy, even for people who work in the industry. As a small business owner, you have many more important things to focus on. Let Pandora CloudCover help with your background music needs. 

We offer comprehensive licensing packages for business owners just like you, and our fees are much smaller than those charged by publishers, PROs, and others. We also offer business-friendly tools like dayparting and messaging. 

Start your 14-day free trial with no credit card required. See how powerful this tool is for yourself. Terms and conditions apply.

References

Can Music Make You More Productive? (September 2022). Harvard Business Review. 

Copyright Law of the United States (Title 17). (December 2024). U.S. Copyright Office. 

The United States Modernizes its Music Licensing System. (December 2018). World Intellectual Property Organization (WIPO).