THE IMPORTANCE OF PROPERLY LICENSED MUSIC FOR BUSINESS
So you want to play music in your business? Great!
But before you reach for that AUX cord, make sure you’re legally covered.
But while you may pay for a personal subscription streaming service such as Apple Music or Spotify, those personal music services are not authorized for use in a commercial environment. To play music in a place of business, you are required to pay a licensing fee.
A music licensing fee is a form of payment that allows the artists, authors, composers, and publishers to be compensated for their music. These fees are handled by what are known as Performance Rights Organizations, or PROs. Sometimes also known as a performing rights society, PROs serve as an intermediary between the music industry and those who wish to use copyrighted material in public locations and businesses.
The four biggest PROs are ASCAP, BMI, SESAC, and SoundExchange. Businesses can be subject to significant fees and legal penalties if they don’t secure the proper rights to the music they play.
GET TO KNOW YOUR PROS
- ASCAP – American Society of Composers, Authors and Publishers. Founded in 1914.
- BMI – Broadcast Music, Inc. Founded in 1939.
- SESAC – Society of European Stage Authors and Composers. Founded in 1930.
- SoundExchange – Created as a division of the Recording Industry Association of America (RIAA) in 2003.
While it can be tempting to ignore the need for licensed music altogether and take the chances of getting caught, it may not be in your best interest. Be warned, the fines for failure to pay a fee are not cheap.
In 2019, one business sued by ASCAP – the Meadowlark Bar in Denver, Colorado – was ordered to pay a fine of $27,000 for failing to pay the proper licensing fees.
According to Jackson Wagener, ASCAP’s vice president of business and legal affairs, Meadowlark was covered by a music license a few years before. “They first had a license in 2010 and ultimately stopped paying license fees, terminating their license in 2015.” Their decision to not maintain their license ultimately caught up with them.
Amount in dollars per incident for unauthorized performances of musical works.
JP’s Corner Bar in St. Louis was sued by BMI for an undisclosed amount in 2019. The heavy fines were too high, and the business permanently closed shortly after the lawsuit.
These examples may seem extreme, but they’re not rare. In the example mentioned above, Meadowlark was just one of nineteen establishments filed that month.
Another consideration is that, aside from live shows and merchandise, licensing fees are one the few ways artists can make money from their music. Since the rise of music streaming, album sales are hardly a viable option for musicians to make a living. So not only is it illegal to play music that is not specifically licensed for business, but it also robs the artists and musicians of income that rightfully belongs to them. In fact, over a billion dollars of revenue is lost from unlicensed music each year.
DID YOU KNOW?
“Happy Birthday” used to be copyrighted music. Music publisher Warner/Chappell collected an estimated $2 million annually from the use of “Happy Birthday” in movies and television shows. It wasn’t until 2016 that “Happy Birthday” was officially entered into the public domain.
Here are a few examples of just how steep the fines can get:
- In 2019, ASCAP sued the Meadowlark Bar in Denver for a fine of $27,000.
- BMI sued one bar in Missouri for an undisclosed amount, forcing the bar to close after the lawsuit.
- The Green Knoll Grill in New Jersey was sued by BMI for more than $20,000.
- Vazzy’s Cucina in Connecticut paid $18,000 for illegally playing just nine unlicensed songs.
- 69 Taps in Ohio paid $1.5 million in fines for a cover band that played only ten songs.
- And the fines are not limited to just bars and restaurants, BMI sued the Biltmore Hotel in Oklahoma City after contacting the establishment over 70 for violation concerns.
- And the Hilton Garden Inn in Bloomfield, NY was sued by ASCAP for $30,000.
Thankfully, there are many companies that provide music for businesses and will cover all of the licensing issues and fees on your behalf. Mood Media, for instance, is one such company. And with nearly a hundred years in the music industry, they have the experience and knowledge to work with you to find the music that best fits your business. These music subscription services offer professionally designed music playlists that are specifically created for business use. The added advantage is that you benefit from music that is screened to remove any lyrical content that could be considered offensive, and – depending on your agreement – is usually ad free as well. Purchasing music for business service also means that all of the appropriate licensing fees are covered, so you can play the music you want, worry free.
Amount of lost revenue to artists due to unpaid licensing.
The bottom line is, you should be paying for the music you use. Not only do you avoid hefty fines, but it’s also the right thing to do.
TERMS TO KNOW
PROs (PERFORMANCE RIGHTS ORGANIZATIONS)
Groups that are responsible for collecting income on behalf of publishers and songwriters when a song is publicly broadcast or performed. Public performances can include being played on television or radio, in bars and restaurants, or played on websites. The organizations collect license fees for use of music, which they pay out to the appropriate parties after taking a small fee.
The right of the actual sound recording, owned by the record label and/or artist. To make a copy of the sound recording, an individual or a business requires a license from the owners. Mood has direct licenses with all the major record labels – Universal Music, Warner Music – and nearly 5,000 independent record labels.
The right of the author, composer and publisher of the musical composition, to the song’s music and lyrics, referred to legally as the “underlying musical work.” To make a copy of the song, a business needs to secure the mechanical rights from the publisher directly or through The Harry Fox Agency who may be the publisher’s administrator. Mood has direct licenses for the mechanical rights with thousands of catalogs throughout the world as well as with the Harry Fox Agency.
The rights granted by the owner of the Master Rights (the record label and/or artist) and Mechanical/Performance Rights (composer, author and/or publisher) to authorize the duplication, distribution, and performance of a musical work embodied within a sound recording to be ‘synchronized’ with various audio/visual media outputs. These outputs may include film, television shows, advertisements, video games, movie trailers, etc.
The right to publicly perform a musical composition within a business. A performance includes the use of any form of music player, including but not limited to, an MP3 or CD player or any form of broadcast, such as AM/FM or satellite radio. These rights are either administered directly from the publisher or through performing rights organizations such as ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.) or SESAC. Mood holds direct licenses with all of the above as well as other performance rights organizations.
COMPILATION CDS, PRE-LOADED PORTABLE MEDIA AND MUSIC DOWNLOADS
In order to produce a compilation CD, produce pre-loaded portable media or provide music downloads, a business or individual requires a license for each song from the record label and/or artist (owners of the Master Rights) and from the author, composer and publisher (owners of the Mechanical Rights).
Creative work that is not protected by intellectual property laws such as trademark, copyright, or patent laws.