What You Need to Know About Music Licensing for Your Business

What You Need to Know About Music Licensing for Your Business
Image credit: Shutterstock.com

Grow Your Business, Not Your Inbox

Stay informed and join our daily newsletter now!
4 min read
Opinions expressed by Entrepreneur contributors are their own.

When you walk into a business, what do you hear? Classical, relaxing music to set the tone for your shopping experience? Many companies use music as part of the atmosphere of their store or restaurant, but is it legal? We talked to an entertainment attorney to find out what business owners need to know about playing music in their businesses.

Music is protected by copyright law, which provides exclusive rights to copyright owners to perform or play their songs. If someone plays music without permission, they are infringing on the copyright, and copyright law allows the owner to recover damages ranging from $750 per violation, to $150,000 if a court decides the infringement was willful.

"Music is a commodity, just like anything else," says Peter Strand, an entertainment lawyer with Leavens, Strand, Glover & Adler LLC in Chicago. There are some exceptions, Strand notes, but in the majority of cases, a license is required to play music in your business.

Last year, in Range Road Music, Inc. v. East Coast Foods, Inc., the Ninth Circuit Court of Appeals found a California business violated copyright laws when it played music without a license. The court awarded the Performing Rights Organization (PRO) nearly $200,000 in damages and attorney's fees. PROs hire investigators that visit businesses to see whether songs are played without a license. "When [they] sue, they don’t lose," Strand explained.

Related: 7 Qualities to Look For in a Lawyer

One exception to the rule allows businesses of a certain size (stores under 2,000 square feet, restaurants or bars under 3,750 square feet) to play music from a radio, television, or similar household device without a license, provided there are fewer than six speakers (with limits on the placement of speakers), and customers aren't charged to listen. Other exceptions include educational and charitable functions.

How to obtain a license.
Songwriters, composers and music publishers generally join one of three Performing Rights Organizations that license their work to the public: the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), and SESAC . The PROs send royalties to the copyright owners.

However, obtaining a license from one PRO doesn't necessarily mean you're in the clear -- you only have a license for that PRO’s copyright holders. For example, the composer of a song may be represented by ASCAP, while the lyricist may be with SESAC. To avoid this problem, some businesses choose to purchase a blanket license from each of the PROs, which allows the licensee to play any of the music from each PRO’s library. Blanket licenses can range from the low hundreds to several thousands of dollars per year.

Related: Use Photos in Advertisements? Take These Steps to Avoid a Lawsuit

Strand offers four tips for businesses considering using music in their stores:

1. Ask why you want music in your business. A business needs to look at why they want music in their stores and what they hope to accomplish, Strand says. Is it to create ambiance or a certain atmosphere?

2. Investigate the exceptions to see if they apply. If your business falls into one of the categories listed above (size of business, number and placement of speakers, etc.) radio/TV] you may want to check out section 110(5) of the Copyright Act. As you likely won't need a license. But, before making a decision, check with a lawyer.

3. Get professional help. Strand suggests finding a lawyer who has experience negotiating licenses. Many lawyers who practice in this area have relationships with individuals at the PROs, and they may be able to leverage that relationship into a favorable license fee for you.

4. Negotiate the licenses. Strand says the amount you pay for a license is negotiable, just like any other license. When calculating your rate, ask the PRO to consider the type of business you're in, square footage of the property, how often music is played, and the amount of consumer traffic you receive. Remember, PROs are more willing to work with you if you're proactive in securing a license as opposed to getting caught without one and facing a lawsuit.

Related: 10 Questions to Ask Before Hiring a Small-Business Attorney

More from Entrepreneur
Our Franchise Advisors are here to help you throughout the entire process of building your franchise organization!
  1. Schedule a FREE one-on-one session with a Franchise Advisor
  2. Choose one of our programs that matches your needs, budget, and timeline
  3. Launch your new franchise organization
Use code MARKET2021 through 4/24/21 to save on 12 marketing books for entrepreneurs that are recommended by entrepreneurs:
  • Digital Marketing Handbook
  • No B.S. Guide to Direct Response Social Media Marketing
  • Ultimate Guide to Youtube for Business
  • And more
Make sure you’re covered for physical injuries or property damage at work by
  • Providing us with basic information about your business
  • Verifying details about your business with one of our specialists
  • Speaking with an agent who is specifically suited to insure your business

Latest on Entrepreneur