When Do You Need Music Licensing for Business Use?

As a business owner, you may wonder how other businesses get the music they play in their stores.

Major chain businesses 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 license music from a performing rights organization (PRO). If you want to play a published song in your business, you must get a license to do so legally, which has required negotiating a contract with a PRO until recently.

To get 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 appropriately navigate a contract.
• Consider other solutions 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?

Do not try to play any published music in your establishment without an appropriate license. 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.

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 do this. You can either get licenses from the major PROs, such as BMI and ASCAP, or you can subscribe to a music-for-business streaming provider, such as CloudCover.

How a Business Owner Works With a PRO

PROs manage music licensing for businesses, from retail stores to film 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.

To navigate getting the right license with a PRO, you must:

• 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.

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 to contact 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

If you want to purchase a license through BMI, SESAC, or ASCAP, you can go to their website and answer a few questions about your business before creating an account and paying the licensing fees. The benefit of this arrangement is that your contract will be tailored to your business. The downside is that you will probably need to set up several contracts with multiple PROs, which can be costly and time-consuming.

However, PROs do make it easy to sign up online. For example, through BMI’s website, you go through their online portal, choose your business type, and click “apply for license.” This leads you to create a username and password, and you can then open and manage your account entirely online.

ASCAP has a similar setup, determining licensing rates based on size and type of business, to ensure music licensing is affordable for small business owners. SESAC has a page dedicated to business owners looking to license their catalogue, offering routes to learn more or manage an existing account.

Here are the steps to follow with most PROs:

1. Determine which PROs represent the type of songs that you are most interested in playing in your business.
2. Contact the PROs in question. Most have a form on their website where you can start, or you can call them directly.
3. Enter some information about your business, including your average number of customers per day, the setting in which you'll be playing the music, and other specifics about potential music choices.
4. Review the proposed license information, including the annual cost and terms.
5. Accept the terms and pay.

Why You Must License Music from PROs

Copyright laws for music are strict when it comes to any public performance of a published work. 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 the legal definition of a public performance involves any instance of that song being played for a significant number of people or the potential for a significant number of people.

There is an exception in copyright law called the homestyle exemption. If the music performance fits certain criteria, it is exempt from licensing laws. This means that if your small business fits these criteria, you don’t have to pay to license music you play, but most businesses don’t meet these requirements. These criteria are:

• The music is 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 music. If you play from a personal 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 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, you can always find copyright-free or royalty-free songs online. There are some websites that offer playlists of instrumental music that have no copyright or no associated royalties, which you can play in your establishment. You could download these kinds of songs individually and build your own playlist.

You could also contact a PRO and get a general license, and consider it part of growing and expanding your business and your level of professionalism.

It is much better to find legal solutions you can trust, so you can focus on growing your business while creating great ambiance for your customers. Since music streaming services are increasingly popular, several companies offer commercial music streaming for business services. This means you can easily manage your playlists through the internet, on multiple devices, with the assurance that all PRO licensing has been taken care of.

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 music in your business—such as your office lobby, bar, restaurant, hotel, gym, coffee shop, or spa—you need a public performance license to legally play music for your customers.

What is a public performance license?

A public performance license enables you to legally play a song in public, such as in your business or in advertisements. 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 get fined. You may get an initial warning letter, but if you continue the practice, you could face fines of up to $30,000 per song. If your action was willful (such as after being warned), your fines could reach $150,000 per offense.

Can I play music from a personal streaming account in my business?

Not legally. 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 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.