Can I Press Play Or Must I Pay?: Music Licensing Requirements for Businesses

Saper Law often fields calls from businesses owners who have received copyright infringement notices, or worse, have been served with a copyright infringement lawsuit for not acquiring the proper copyright licenses to play music in their venues.

If you are a venue that has received this type of notice, or if you are a new business owner and are concerned about copyright issues, you may want to watch this video from the August Seminar at Saper Law which was held in conjunction with BMI and the Illinois Restaurant Association:

The Saper Law seminar discussed different ways that a business can avoid copyright infringement, including the option of getting a license to play music through a Performing Rights Organization (PRO).  PRO’s are organizations that are responsible for collecting income on behalf of songwriters and music publishers when a song is publicly broadcast. When music is played anywhere, such as on television in a restaurant, the musician is owed a royalty from that performance. The PRO then tracks down the money and collects those royalties on behalf of the publishers and songwriters. When establishments broadcast music, they are required to pay a licensing fee to the PRO, who then pays a royalty to their registered songwriters and publishers. The two largest PRO’s are The American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music, Inc. (BMI).

ASCAP and BMI are PROs that collect publishing royalties for the public performance of musical works. This includes the collection of licensing fees paid by radio stations, concert venues, nightclubs, etc. for performing music in public. The license fees are paid to the PRO and then royalties are paid to the copyright owners. Both ASCAP and BMI are affiliated with different artists, so unless you know that the music being played in the establishment is specifically under the copyright licensing of one of the PRO’s, it is safest to have licensing agreements with both in place.

SoundExchange, which emerged as a leader in digital performance royalties, is a PRO that collects royalties solely for digital public performances (which includes satellite, internet radio, and cable television music channels) of its featured artist and copyright holders.  In addition to music, SoundExchange also collects royalties for comedy and spoken word recordings.  Due to the difference in the types of royalties collected by SoundExchange vs. other PRO’s, it is advised to know where your broadcasts are coming from and have a license in place with each appropriate source.

There are limited exemptions that benefit small establishments.  The most common exemption is a “homestyle exemption” under the Copyright Act (§ 110(5)(A)), which provides businesses two narrow exemptions under which a business owner would not have to pay licensing fees. Small businesses can take advantage of these “homestyle” exemptions so long as, in addition to the requirements discussed below, the establishments do not charge to see/hear the transmission, and do not broadcast beyond the receiving establishment.

• §110(5)(A), most commonly referred to as the Aiken exemption, applies if the establishment broadcasts through a single radio or television receiving apparatus that is of the type that is commonly used in one’s home.
• §110(5)(B) provides an exemption when the public performance is received by the general public in a food or drinking establishment or another establishment (e.g. a store), so long as the transmission is made over six or less loudspeakers (of which no more than 4 loudspeakers are located in any 1 room or adjoining outdoor space), and the gross square feet is less than 3,750 for a food/drinking establishment or less than 2,000 square feet for any other establishment.

PRO’s are notorious for sending their agents out to establishments to “police” for copyright infringement and bring action against businesses that are not in compliance.  For establishments that are not exempt from licensing requirements, there are different types of licensing fee structures that PRO’s will negotiate to help business owners prevent copyright infringement. For example, ASCAP generally licenses establishments with a “blanket license,” which is a flat fee license paid annually by the establishment instead of tracking and paying a fee per song that is played. BMI, ASCAP and SoundExchange have many licensing options to choose from to tailor the license to the establishment’s specific needs.

As always, Saper Law is here to address your questions regarding obtaining music licenses for your business. You can reach us at 312.527.4100 or email ds [at] saperlaw.com