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Understanding Music Licensing: A Guide for Business Owners
As a business owner, you understand the importance of creating an inviting atmosphere for your customers and appealing to potential customers via marketing. However, playing music publicly in your establishment, as “on-hold” music for business calls and in your business’s social media and marketing requires a license. In the U.S., musical works are protected under the U.S. Copyright Act.
Why a License?
Anytime music is performed, played or broadcast to the public, an advance license from the copyright holder is required. Failure to obtain a proper license for using music could subject your company to liability for thousands of dollars of damages from a minimum of $750 up to a maximum of $150,000. It also could result in costly and time-consuming civil litigation. There are criminal penalties for copyright infringement as well, although criminal prosecution is typically reserved for cases involving intentional, large scale infringements.
Kinds of Licenses
Licenses are not “one size fits all.” In addition, it is vitally important to understand the scope of any license – including what music your business is licensed to use and how you may use the music within the bounds of the license. Subject to those cautionary statements, most business owners need public performance licenses. Performing rights organizations (PROs) generally facilitate these licenses. There are three primary PROs:
- American Society of Composers, Authors and Publishers (ASCAP)
- Broadcast Music, Inc. (BMI)
- Society of European Stage Authors and Composers (SESAC)
Each PRO represents different copyright holders (i.e. songwriters, composers and publishers) and licenses only the works of its copyright holders. You will need to review what artists are represented by a PRO to determine which PRO best suits your needs. Businesses typically need licenses with more than one PRO.
Importantly, a public performance license does not cover use of music in commercials, TV, film or any other audiovisual production. Those uses require a synchronization license with all publishers of the song. The Harry Fox agency, harryfox.com, represents many U.S. publishers in granting synchronization licenses.
Costs for a license depend on factors including the type of business, type of music and how often music is played.
May a Business Owner Use a Personal Account to Stream Music in a Business?
No. Music in a personal streaming account such as Apple Music or Spotify is licensed for personal use, not for use in a business. Instead, a commercial streaming account is required. Use of music on CDs, records or other media do not meet fair use under copyright law either. In these instances, like streaming services, the music is licensed to the person who owns the CD, record, etc.
Streaming Services
For some businesses, streaming services may be more cost-effective. These services handle licensing on your behalf, providing a legal way to play music in your establishment without dealing with multiple licenses.
No License Required
Copyright expires either 70 years after the death of the musician or 95 years after publication. Thus, it is unlikely the latest top 40 song will be available copyright free.
In addition, there are other limited situations when a license may not be required. Business owners who use commercial broadcast radio or television may not need licenses if they meet certain restrictions to the business’s square footage, number of speakers, lack of admission fees and size of TV. (Internet and satellite radio do not qualify as broadcast radio.) A careful evaluation of the facts would be required to formulate a legal opinion as to whether a license is required.
While music licensing might seem complex, it is a necessary part of operating a business where music is played in any capacity. Obtaining the proper music licenses for your business is not only a legal requirement but also a smart business practice. If you have any questions or need assistance with music licensing, please contact Carrie A. Johnson.
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Disclaimer: This alert has been prepared by Eastman & Smith Ltd. for informational purposes only and should not be considered legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney/client relationship.