Playing Music in Your Business: A US Licensing Guide

A personal stream is not a business license

A streaming app, a video site, a purchased CD or a downloaded file gives you music to listen to. It does not give you permission to play that music for your customers. Consumer streaming services license their catalogs for private listening: Spotify, for example, states that its service is only for personal, non-commercial use and names bars, restaurants and stores among the places where it may not be played publicly.

Buying a recording does not change this. The Copyright Act treats ownership of a copyright as separate from ownership of the CD or file that contains the work, so owning a copy does not carry the right to perform the songs on it in public. The same applies to a staff member's phone connected to the store speakers: what matters is not the device but where the music is heard and by whom.

What the Copyright Act says

The Copyright Act, Title 17 of the United States Code, gives the owner of a musical work the exclusive right to perform it publicly (17 U.S.C. § 106(4)). Under the definitions in § 101, a performance is public when it takes place somewhere open to the public, or where a substantial number of people outside a normal circle of family and social acquaintances is gathered. To perform a work includes playing it through any device. A dining room, sales floor, hotel lobby or fitness studio fits that definition, so pressing play on the sound system is a public performance.

The radio and TV rule for smaller establishments

Section 110(5) contains two narrow rules for businesses that turn on a radio or TV. The first, § 110(5)(A), covers a single receiving set of a kind commonly used in private homes, with no direct charge to see or hear it and no further transmission. The second, § 110(5)(B), added by the Fairness in Music Licensing Act of 1998, covers broadcasts by FCC-licensed radio and TV stations (and, for TV, cable and satellite programming) when all of these conditions are met:

• The establishment has less than 2,000 gross square feet, or less than 3,750 gross square feet for a restaurant or bar, not counting customer parking; or, if it is larger, it stays within the equipment limits below.
• Audio: no more than 6 loudspeakers in total, with no more than 4 in any one room or adjoining outdoor space.
• Audiovisual: no more than 4 TVs or similar devices, no more than 1 per room, no screen larger than 55 inches diagonally, and the same loudspeaker limits.
• No direct charge is made to see or hear the broadcast, it is not transmitted beyond the premises, and the broadcast itself is licensed.

This business exception concerns radio and TV broadcasts only. It does not extend to recorded music such as CDs, downloaded files, or playlists streamed from an app. A business that relies on it without reasonable grounds can face an additional award, described below.

Who issues performance licenses

Songwriters and music publishers usually license public performances through performing rights organizations, which offer blanket licenses covering their whole repertoire. There is no single government-run body: several private organizations operate side by side. The two largest, which together account for roughly nine-tenths of the market according to the Department of Justice, are bound by antitrust consent decrees with the Department dating back to 1941. If a business and one of these two cannot agree on a fee, a federal judge in the Southern District of New York can set a reasonable rate. The other organizations are not subject to those decrees. In January 2021 the Department of Justice closed its most recent review of the decrees without proposing changes.

Two separate rights in every recording

Every recorded song involves two copyrights: the musical work (melody and lyrics, owned by songwriters and publishers) and the sound recording (the recorded performance, usually owned by a record label or the artist). US law treats them very differently when music is played in a business.

Musical works. The public performance right in § 106(4) applies whenever a song is played in your business, whether it comes from a CD, an app or a live band. This is the right the performing rights organizations license.

Sound recordings. Section 114(a) states that the rights in a sound recording do not include a performance right under § 106(4). The only performance right for sound recordings is in § 106(6): performing the recording publicly by means of a digital audio transmission. Playing a recording over speakers on your own premises is generally not a transmission in the statutory sense, so as a rule, in-store playback does not call for a separate sound-recording performance license, and the US has no statutory remuneration scheme for performers and labels covering such playback. Transmissions delivered to a business for use in the ordinary course of its business are addressed separately in § 114(d)(1)(C)(iv). Different rules can apply if you stream music beyond your premises, for example online, so ask any provider how it has cleared the recordings it delivers.

Several organizations, several licenses. Each performing rights organization licenses only the songs in its own repertoire. A song with several writers can be split between organizations, and the Department of Justice has noted that the courts allow a license for only the share an organization controls. A business playing a broad mix of mainstream music may therefore need licenses from more than one organization, each offering and invoicing its own license.

What license fees are based on

No statute sets a fee for background music in a business. Each performing rights organization publishes its own rate schedules by business category, and the fee for a location is typically calculated from factors such as:

• the type of business: restaurant, bar, retail store, hotel, fitness facility and so on;
• size: occupancy or seating capacity for restaurants and bars, square footage for many other businesses;
• how music is used: recorded music, live performers, DJs or karaoke, audio only or with TVs;
• the amount of equipment, such as the number of speakers or screens;
• how many days or nights a week live music is offered, and whether admission or a cover charge is collected.

Rate schedules are revised over time, and licenses run for a set term, so the amount you pay is not fixed permanently. The two organizations under consent decrees must offer the same terms to similarly situated businesses in the same industry; the others set their terms by negotiation. Because each organization covers only its own repertoire, one location may carry several license fees. Ask each licensor for its current schedule and the factors it applied to your business in writing, and report changes such as a new terrace or added live music, since they can affect the calculation.

Playing music without a license

Performing a musical work publicly without permission is copyright infringement. The remedies are set out in the Copyright Act:

• Damages. Under § 504, the copyright owner can recover its actual damages and the infringer's profits or, instead, statutory damages. Statutory damages are awarded for each work infringed, within a range fixed by the statute. The court may increase the award if the infringement was willful and reduce it if the infringer was not aware and had no reason to believe that its conduct was infringing.
• An additional award tied to the radio and TV rule. If a business relies on § 110(5) without reasonable grounds to believe its use qualified, the court adds an award of twice the license fee it should have paid for up to the preceding three years (§ 504(d)).
• Costs and attorney's fees. The court may award costs and a reasonable attorney's fee to the prevailing party (§ 505). Statutory damages and attorney's fees are generally available only where the work was registered in time (§ 412).
• Injunctions. A court can order the infringing performances to stop (§ 502).
• Criminal provisions. Section 506 applies only to willful infringement in defined cases, including infringement committed for commercial advantage or private financial gain.

Responsibility generally rests with the business. Courts have long held that the operator of a venue can be liable for unlicensed performances on its premises, including music chosen by a hired band, where it has the right to supervise and a financial interest in the activity.

How a directly licensed catalog works

Performing rights organizations license only the works their members have entrusted to them. Copyright owners remain free to license their works directly, and the consent decrees governing the two largest organizations protect their members' ability to do so. A directly licensed catalog follows that route: the provider owns or controls both the musical works and the sound recordings in its catalog and grants the business a license to perform them.

What such a license covers, and what it does not:

• It covers the provider's own catalog, played through the provider's service at the licensed location.
• It does not cover radio, TV, live musicians, DJs, karaoke, or your own playlists and streaming apps. Those uses need their own licenses, or must meet the radio and TV rule described above.
• If you combine sources, for example a licensed catalog in the dining room and a TV at the bar, each source is assessed on its own.

To win an infringement claim, the person suing must show that it owns a valid copyright in the works in question and that they were used without permission. In practice, representatives of the performing rights organizations do contact businesses that play music. Keeping your license certificate, the name of your provider and its catalog information on file lets you show clearly what is playing and on what basis.

What Mublic offers

Mublic is a background music service for venues. Its catalog is produced by Mublic and is not part of any performing rights organization's repertoire, and the license to play it in your business is included in the subscription.

• Music chosen for your sector, with an atmosphere that changes with the time of day.
• Each zone, such as a dining room, terrace or sales floor, can run its own player.
• If the internet connection drops, playback continues from tracks downloaded in advance.
• A license certificate with a QR code is issued for each location, so it can be verified.
• In-store announcements can be scheduled alongside the music.

The license covers only the Mublic catalog. If radio, TV, live music or another service plays in your venue, that use is outside its scope. You can try Mublic for 7 days without a credit card; the trial does not include a license certificate, which is issued with a paid subscription. Start a free trial, see pricing or set up your venue.