Licensing Killed the Radio Star: When Retailers Need Music Licenses

Your business may play the radio to enhance the customer experience. Or it may hire a band to play live music. If you were to receive a legal notice demanding payment for a license to play recorded or live music in your establishment, would you be obligated to pay?

Perhaps surprisingly, the answer is often “yes.” By law, the owners of copyrights in music have the exclusive right to publicly perform or authorize performance of their works. The meaning of a “public performance” has been broadly interpreted under the law and includes live or recorded music played “at any place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” Thus, although you do not need a license to play the radio in your car, “public performances” of music in hotels, restaurants, bars, retail stores, and shopping malls may require proper licensing.

Owners of copyrights in music usually join one of the three Performing Rights Organizations (“PROs”) and rely on these organizations to enforce their legal rights. Businesses that wish to publicly perform copyrighted music may obtain performance rights (for a fee) from the PROs and are thus spared the hassle of having to negotiate licenses from each individual copyright holder. The three major PROs are: the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music, Inc. (BMI); and SESAC, Inc. (SESAC). If you should have licenses from the PROs and do not contact them first, chances are they will eventually contact you and insist that you purchase the appropriate type and level of license for your business.

Each PRO is a separate organization with a distinct library of music. Thus, procuring a license from SESAC will only allow a business to play songs for which SESAC manages the performance rights. Songs in the ASCAP or BMI repertories would require separate licenses from those PROs.

Certain exemptions may apply. For instance, in the case of radio or television transmissions, a food service or drinking establishment with less than 3,750 gross square feet or any other establishment with less than 2,000 gross square feet is automatically exempt. Larger establishments that play the radio or TV may also be exempt if they have a small enough number of loudspeakers or audiovisual displays and no direct charge is made for patrons to see or hear the transmission. Alternatively, businesses that already pay for music subscriptions through services that deliver music directly to their business premises or through satellite radio most likely do not need to obtain a license - the required license should have already been obtained by the music service company. Do not assume, however, that your establishment is exempt if it hires a band or DJ and the contract says the band or DJ is responsible for securing performance rights. Proprietors are liable for any infringement of copyrighted music in their place of business.

Even innocent infringers can be required to pay significant monetary damages, and willful infringers may be subject to more serious civil or criminal penalties. Therefore, businesses that publicly perform live or recorded music should ensure that they obtain sufficient licenses and keep them up to date.

Related topics: Compliance, Intellectual Property, Retail