Music Licensing is probably not something you think about if you own a business with a brick and mortar storefront and play background music for your customers or patrons to enjoy. There is a good chance you are violating federal copyright law. Most business owners don’t realize it but music is a form of intellectual property. It is illegal for a person or business to utilize intellectual property created and owned by another without obtaining permission first. Permission may be obtained in a number of ways, but the most common method is through music licensing.
Obtaining a license for music is very simple.
Remember when you bought that Maroon 5 album on iTunes last month? When you paid for it, you were purchasing a perpetual license to listen to each of the songs on the album. The licenses you obtained are very narrow and specific because they only apply to you personally. You do not have permission to go play the Maroon 5 album as background music for the customers in your store, or patrons at your bar.
Playing music for your customers requires music licensing.
Regardless of the method (via iTunes, compact disc, mp3, etc.), playing music for your customers requires a different type of license. It’s called a public performance license. Public performance licenses come in a variety of different packages (depending on a person’s/business’ needs). The underlying purpose is essentially the same across the board. It gives the licensee permission to play music to a large group of people in a public setting.
Public performance licenses are acquired through Performance Rights Organizations. In the United States, there are four primary agencies: (1) the American Society of Composers, Authors, and Publishers (“ASCAP”); (2) Broadcast Music, Inc. (“BMI”); (3) the Society of European Stage Authors and Composers (“SESAC”); and (4) SoundExchange. Performance Rights Organizations offers licenses that enable the licensee to publicly perform/play music. Acquiring the rights to play a song in your brick and mortar store is not always as simple as purchasing a blanket license from one of these organizations.
Registering with a Performance Rights Organization
Excluding SoundExchange, songwriters and composers may only register with one of the three main Performance Rights Organizations (ASCAP, BMI and SESAC). Obtaining a blanket license from one of the main Performance Rights Organizations only grants a public performance right in songs that are included in that their catalog. An ASCAP license may provide a public performance license for songs written by The Beatles, but not anything written by The Beach Boys (who are registered with BMI).
Songs that are co-written (in terms of lyrics or composition) by two or more people registered with different Performance Rights Organizations may require obtaining multiple licenses. One from the organization which will only grant a public performance license to the rights owned by the writer. The composer may be registered with another organization. It may be necessary to acquire licenses from multiple Performance Rights Organizations just to play one song.
The type of public performance license needed is dependent upon the method in which the music is being transmitted.
Businesses who play music through a streaming service, such as Pandora, would need to acquire a commercial license from Pandora. Proceeds from the Pandora commercial music licensing would go to SoundExchange. Unless the streaming service being used offers a commercial license, playing music from a streaming service in a commercial setting would be illegal. A public performance license is needed even if a business only has live music (rather than recorded), unless the music being performed is completely original.
Whether you just opened your business or if you have been in business for decades, it is critical to obtain the appropriate music licenses if you are playing music for your customers/patrons. There are specific thresholds for determining what qualifies as a public performance. The vast majority of businesses fall within the boundaries of the term. Performance Rights Organizations also actively monitor and enforce the rights of their members by demanding payment and/or successfully suing violators. Ignorance of the law is not a defense, so failure to obtain the appropriate rights can cost a business thousand and thousands of dollars.
Intellectual property law in the music industry is extraordinarily complex.
Blanket licenses are powerful and effective tools for businesses that want to use music to entertain customers. It is critical to ensure the correct licenses, in terms of both the number and type, are obtained. You don’t want the Performance Rights Organizations to take legal action against you or your business. If you are uncertain whether your business is in compliance or what type of licenses your business may require, seek the assistance of an entertainment attorney.