As a business owner, you may wonder how other businesses get the music they play in their stores.
Major chain businesses often have consultants who find great artists and license their music for soundtracks to play in each location. Smaller businesses have owners dedicated to making unique playlists for their stores.
However, each of these types of businesses has something in common: They're required to license their background music from a performing rights organization (PRO). If you want to play a published song in your business, you must secure the necessary licenses, which used to require negotiating a contract with a PRO -- until recently.
To get background music for your business, you will need to:
- Know more about PROs, including the major PROs, and how they license music.
- Understand why you must legally license music from the PROs, so you can improve your understanding of music licensing contracts.
- Consider Pandora CloudCover to legally play music in your business if you are concerned about the legal complexities of working with a PRO.
What Happens if I Play Music in My Business Without a License?
It's not wise to play any published music in your establishment without all appropriate licenses. You can face fines ranging from $750 to $150,000 per infraction. If you play several songs without a license, these fines can add up incredibly quickly.
A bar owner in Oklahoma found out about potential penalties firsthand in 2018. The bar played songs via a jukebox without the proper license for a public performance. The article indicates that the PRO BMI contacted te bar owner, but he ignored the letters. BMI asked the courts for a summary judgment of $40,000. The case was settled out of court.
Another bar in Colorado was sued by the PRO BMI in 2014 and lost the case. The bar had a contract with the PRO ASCAP, but played songs represented by BMI instead. When the bar was asked to pay a $21,000 fine, the article indicates the bar chose to go out of business instead.
Many people don't want to pay for a license to play music. However, doing so could save you money. This table makes your potential savings clear.
Even if you subscribe to a personal streaming service, such as Spotify or SiriusXM, this doesn’t mean that you can play music from your personal account in your business. You need a public performance license to play background music in your business. You can either get licenses from all of the relevant PROs, such as BMI and ASCAP, or you can subscribe to a background-music-for-business streaming provider, such as Pandora CloudCover.
How a Business Owner Works With a PRO
PROs manage public performance music licensing for businesses, from retail stores to large companies, so musicians and composers can be paid for the use of their intellectual property. When you purchase a subscription to a music streaming service like Pandora or Google Music, you pay for an individual license to listen to this music in a private setting; however, this is not the right license for your business.
The Major PROs & How They License Music
There are several PROs, depending on which country you reside in; however, there are a few major PROs that cover catalogues of millions of songs.
Broadcast Music, Inc. (BMI)
Founded in 1939, BMI originally sought to protect the rights of composers and musicians in new genres, like jazz, country, and blues. This organization is now the largest PRO in the world, with more than 1 million members that are mostly artists and a catalogue of 22.4 million copyrighted musical works.
Benefits for artists of BMI include free membership for new artists, $150 for small organizations to join, $250 for recording companies or large organizations to join.
American Society of Composers, Authors and Publishers (ASCAP)
ASCAP is the oldest of the PROs, founded in 1914, and it was the first group in the United States to lobby on behalf of artists’ right to their work. This company helped musicians and composers navigate new copyright laws to their benefit and prevent their work from being exploited.
There are currently 750,000 members of ASCAP, and the organization manages a catalogue of 19 million songs. Although this is a smaller PRO, it is a nonprofit organization that is owned by its members, so it always advocates for artists’ rights. Membership is only $50 for new members.
SESAC
This major global PRO, originally focused on European artists, represents 30,000 musicians and composers and has a music catalogue of 1+ million songs. Unlike the other two large PROs, SESAC is a for-profit organization and only represents artists that it invites to become a member.
SESAC was originally founded as the Society of European Stage Authors and Composers in 1931, 22 years after some of the first copyright laws were enacted. Membership rates are negotiated per artist, but SESAC pays higher royalties than many other PROs.
GMR
This PRO was founded in 2013. While they haven't been around nearly as long as the other major PROs, they are making a splash on the scene, representing such artists as Bruce Springsteen, Lizzo, and Drake.
Other PROs
There are several smaller PROs, with new ones forming regularly to represent new artists in a changing cultural landscape.
How to Get a License With a PRO
To navigate getting the right license with a PRO, you may consider:
- Find out which PRO manages licenses for the music you want. This is likely to be one of the big three PROs, like BMI, ASCAP, or SESAC.
- Contact the PRO and discuss your business with them.
- Negotiate a contract for music licensing with a fee you can afford.
- Manage monthly or annual payments to maintain access to the PRO’s library.
- Get multiple contracts with several PROs to get the right playlist for your business.
Let’s dig into all of these steps with more detail.
Research Your PRO
If you have your heart set on a specific song or artist, you could look for that content on a site like YouTube or Spotify. Typically, the name of the copyright holder is listed in the description of the content, but it might not be accurate.
Contact Your PRO
Major PROs include the following:
Choose the PROs you need to work with, and contact them via the links we’ve included.
Identify Your Business Type
Most PROs have a screen in which business owners can identify their business and tap on a “purchase license” button. Here’s an example from ASCAP.
Find the business type that matches yours, and go from there.
Provide More Information
Once you’ve identified your business type, most PROs need more information about how many people might hear the music and how big the building might be. They may also ask for information about the type of music you’ll play. Here’s an example of the form made for dance schools from ASCAP.
Wait for Your Bid
After you’ve provided all of the required information, the PRO will give you an estimated fee. You can choose to pay per month or per year, in most cases. If you agree with the proposed amount, you can accept it, provide your credit card information, and access the music you want.
If you don’t agree with the amount, contact the PRO and negotiate. For example, you might ask the PRO if playing the songs in a smaller area could help you to save money. Don’t be afraid to ask for what you want.
Repeat the Process
A contract with one PRO won’t allow you to pay music that’s protected by other PROs. To play all of the songs you might want, you may need contracts with multiple PROs.
What Is a Public Performance?
U.S. Copyright law protects the rights of musicians, songwriters, and publishers who hold the copyright to songs. These rights holders administer the exclusive right to publicly perform their works and you must license such right to publicly perform their music at your business.
A public performance is usually made when a work is performed or displayed at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.
If you play background music in your business for your customers or employees, that’s considered a public performance. You need a public performance license to play these songs.
For example, you want to play background music in your retail clothing store to ensure shoppers linger and buy more. You will need a license, as this is considered a public performance.
However, if you want to play music in your dining room for your relatives who came to share a meal, you won’t need a commercial public performance license for this.
Why You Must License Music from PROs
You may not consider your business to have a public performance when you’re just streaming music through an app or on your computer, but a public performance is implicated when a song is played for a significant number of people or the potential for a significant number of people.
Exceptions are limited, but one example in copyright law is known as the homestyle exemption. If the music performance fits certain criteria, it is exempt from public performance licensing laws. This that if your small business's music use fits these criteria, you likely don’t have to pay to license music you play, but most businesses don’t meet these requirements. These criteria are:
- The music is only played very quietly in an area for employees.
- Music is played through a small radio or television, so the broadcast determines what is heard, not the business owner.
- The business is 2,000 square feet or less for retail, or 3,750 square feet or less for restaurants.
- There is no admission fee to get into the establishment.
- Music is played in a private setting and not for customers.
Most businesses will need to get appropriate public performance licenses to play background music.
If you play from a personal streaming playlist, you may face multiple fines for multiple infractions from more than one PRO. Plus, if you go to court and lose the lawsuit, you will likely have to pay attorney’s fees and court fees. This huge expenditure could force you to close your business. It's just not worth the risk.
Cost-Effective Music Licensing Solutions
If you’re worried about the costs of playing music in your small business, several other options are available.
Royalty-free Music
Royalty-free music is available to users often via a payment made only once. After you’ve paid for the song, you’re free to keep using it per the license agreement. Sites like Bensound provide this service for a monthly fee of $20 and up.
Public Domain Music
Music in the public domain was published in 1928 or earlier. These very old songs were once protected by copyright law, but that protection has expired. You can publicly perform the composition now without paying music publishing royalties but remember that a public domain composition may be embodied in a sound recording, which is not part of the public domain.
Sites like the Public Domain Information Project maintain lists of compositions which may be eligible for the above exception.
Commercial Music Streaming Services
Several companies work directly with PROs and provide music licenses to business owners like you. They include the following:
Most companies charge monthly prices of $20 or more, and they have trial periods that allow you to test the product before you buy. An arrangement like this ensures you have a large library of music at a low cost.
Frequently Asked Questions
Here are some frequently asked questions regarding music licensing for businesses:
Do I need to license music for my business?
If you play background music in your business—such as your office lobby, bar, restaurant, hotel, gym, coffee shop, or spa—you need all relevant public performance licenses.
What is a public performance license?
A public performance license enables you to legally play a song in public, such as in your business The specifics of the license will vary, depending on your intended use.
What happens if I get caught playing music without a license?
You’ll likely pay fines. You may get an initial warning letter, and the PRO will not pursue any infringement claims if you enter into a license agreement and pay fees. If you continue the practice, you could face infringement claims and associated fines of up to $30,000 per song. If your action was willful (the warning letter can be used as proof), your fines could reach $150,000 per offense.
Can I play music from a personal streaming account in my business?
A personal streaming account is only intended for personal, non-commercial use. To legally play music in your business, you need a commercial streaming account, like Pandora CloudCover. You can also negotiate with each PRO directly for separate licenses.
References
What You Need to Know About Music Licensing for Your Business. (March 12, 2013). Entrepreneur.
About. BMI.
About Us. ASCAP.
Our History. SESAC.
Music Users: Apply for Your BMI Music License. BMI.
ASCAP Licensing: Frequently Asked Questions. ASCAP
Business Owners. SESAC.
You Might Need a License to Play Music in Your Small Business. (September 16, 2011). National Federation of Independent Business.
When Should a Small Business Pay ASCAP or BMI? (October 13, 2011). The Palo Alto Area Bar Association.
Music Streaming: Where Interactive & Non-Interactive Services Fit Under the Homestyle Exemption. (November 2018). William & Mary Business Law Review.
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