By Mitch Rice
Music can set the tone in any business environment, whether you’re running a café or a fitness studio. But if you’re using a personal streaming service like Spotify or Apple Music, you may be in violation of copyright laws.
A staggering 78% of small-to-midsize businesses in the U.S. unknowingly break the law by playing music for customers through personal accounts. Understanding music licensing requirements can help you avoid hefty fines and ensure your business stays compliant.
Why licensing is mandatory
Songwriters and artists hold exclusive rights to perform their work publicly under U.S. copyright law. Playing music in a public setting, like on business premises, is generally considered a ‘public performance’, and the law requires you to get permission from copyright holders. Personal streaming accounts are licensed for private use only—so playing music from these services in a store or restaurant may count as a public performance.
The consequences can be severe: fines can range from $750 to $150,000 per song. To enforce these rules, Performing Rights Organizations (PROs) send field agents to monitor businesses and ensure they’re complying. The risk is real, and it’s essential to understand what licenses you need.
Major PROs in the US
There are several key players in the U.S. music licensing scene. It’s important to note that many songs are ‘split-share’, meaning they are co-written by artists belonging to different PROs. To be fully protected, a business usually needs licenses from all the major organizations:
- ASCAP (American Society of Composers, Authors, and Publishers): Represents over 18 million works from artists like Beyoncé and Katy Perry.
- BMI (Broadcast Music, Inc.): One of the largest PROs, representing over 22 million works by artists like Taylor Swift and Lady Gaga.
- SESAC (Society of European Stage Authors and Composers): A boutique, for-profit PRO representing high-profile creators like Bob Dylan and Adele.
- GMR (Global Music Rights): A private, invitation-only PRO representing stars like Bruce Springsteen and Drake. Because they are a private entity, their licensing rates and enforcement can be more rigorous.
Notable exemptions: The radio and TV rule
The Fairness in Music Licensing Act of 1998 provides a specific exception, but it’s narrower than many realize. This exemption only applies to music played via terrestrial radio or over-the-air television. It doesn’t cover streaming, CDs, or digital playlists.
- Size limits: Retail stores under 2,000 square feet and restaurants/bars under 3,750 square feet are exempt from paying for radio or TV broadcasts.
- Equipment limits: If your business is larger than the limits above, you may still be exempt for radio/TV if you use fewer than six speakers total (no more than four per room) and no more than four TVs.
If you play music via a smartphone, tablet, computer, or CD player, these size exemptions do not apply, and you must have the right licenses regardless of your square footage.
How to stay compliant
There are two main ways for a business to comply with music licensing laws:
- Direct ‘blanket’ licenses: You can pay each PRO (ASCAP, BMI, etc.) a direct annual fee. This allows you to play anything within their catalog. While this gives you full control over your music, it can be costly and difficult to manage multiple contracts. This is also a requirement if your business provides live entertainment.
- Commercial music services: Services like Soundtrack Your Brand, SiriusXM for Business, or Pandora for Business handle the PRO ‘blanket’ fees for you. These typically cost between $35 and $100 per month, covering all necessary PRO fees. These licenses usually only cover background music, and they often require you to use their apps or hardware for playback. But this is a more manageable option for many businesses.
When signing up for a commercial service, ensure you register the account under your official business name (e.g. Sunshine Cafe, LLC). Keeping your Florida LLC filings and music contracts consistent helps maintain the corporate veil, protecting your personal assets if a licensing dispute ever arises.
Staying up to date
The licensing landscape is always changing, particularly as technology changes the way we consume music. It’s crucial to stay informed about new developments in music licensing, such as regulations around AI-generated music or new streaming laws.
- Audit annually: If your business grows, such as by adding more speakers or expanding your physical space, your licensing fees could change.
- Follow industry news: Keep an eye on updates from the U.S. Copyright Office or specific blogs like those of the National Restaurant Association.
- Watch out for scams: Only deal with well-known PROs. If a ‘collection agency’ you’ve never heard of demands payment, verify its legitimacy through ASCAP or BMI’s official websites.
By staying proactive, you’ll keep your business safe and compliant, avoiding fines and ensuring a smooth operation.
Data and information are provided for informational purposes only, and are not intended for investment or other purposes.