Under U.S. copyright law, the proprietor of any establishment playing music (whether recorded or live, including music videos, "hold" music and karaoke) must obtain authorization to do so. This authorization is given under a "blanket license" issued by performing rights organizations (PROs).

Performing Rights Organizations.

PROs are intermediaries that collect licensing fees for public performances of music. These organizations then distribute the fees to copyright holders as royalties. In theory, this makes licensing more convenient and cost-effective for everyone.

There are three PROs (ASCAP, BMI and SESAC) and each has been stepping up enforcement by sending threatening letters to small businesses throughout the country. The PROs hire investigators who may write letters, make phone calls and even conduct in-person visits to see if a business is playing songs without a license.

Why Obtain a License.

If you play songs without permission, you are infringing on copyright and the copyright owner may recover damages against you. Damages range between $750 to $30,000 per infringement and much more if the infringement is deemed to be willful.

In Range Road Music v. East Coast Foods (2012), the Ninth Circuit Court of Appeals affirmed a decision that found a California restaurant and bar guilty of violating copyright laws when it played music without a license. The court determined that eight songs were played over the sound system by CD, as well as by live performers. The court awarded $4,500 for each of the eight songs infringed. Although total damages awarded were $36,000, the court also affirmed the award of $162,000 in attorneys' fees - bringing the total award to nearly $200,000.

Unfortunately, PROs often target small and mid-sized businesses and we have seen a recent uptick in enforcement. Backed by a host of favorable court rulings, the PROs have become increasingly aggressive in investigating possible infringements and filing lawsuits.

How to Obtain a License.

You can purchase a one-time per-event license, or a monthly or yearly blanket license that covers all music played during that time. Most licenses can be bought on-line directly from the PRO.

It's important to note that if you purchase a license from one PRO, you only have a license for that PRO's copyright holders. This causes a problem if a songwriter is represented by BMI but the singer is with SESAC. To avoid this problem, you must acquire a blanket license from each PRO allowing you to play any music from their respective music libraries. This is a best practice if your establishment plays music on a regular basis.

Fees for a blanket license vary depending on several factors: how the music will be used, if the music is live or recorded, the size of the company, the number of registrations for an event, etc. Blanket licenses range in price from a few hundred dollars to several thousand dollars per year. But as the case above illustrated, infringement lawsuits can cost much more.

Are There Exceptions?

Yes.

There is a small business exception that allows organizations of a certain size (businesses under 2,000 square feet; food and drinking establishments with less than 3,750 square feet) to play music from a radio, television or small household device without a license - so long as the business does not charge an admission fee.

Businesses larger than 2,000 square feet and restaurants and drinking establishments with more than 3,750 square feet are exempt if they use fewer than six speakers or TVs (with no more than four in any one room) and a screen size of less than 55 inches.

There is also an exception for educational, non-profit, and charitable organizations to play music without a license if there is no commercial advantage, no person is being paid (including the musical performers) and no admission fee is charged.

Finally, private events held at your place of business are exempt, so long as admission is free. 

Avoid Copyright Violations.

Use the following as a guide to avoid violating copyrights when playing music at your business:

• If you use broadcast radio or TV for background music, determine if one of the exceptions discussed above applies to your business.
• If not, determine whether your business has purchased a license from one or more of the PROs. We recommend you purchase a blanket license from all three PROs if you play music on a regular basis.
• If you use a service to provide background or "hold" music, ask your service provider if their fees include licenses and make sure this information is stated in your service agreement.
• If you hold an event at a venue that includes the performance of music, review the contracts, including venue and vendor agreements, to ensure necessary licensing fees are addressed and covered.
• If you have live bands or musicians in your place of business for public enjoyment, make certain the musicians play only original works, or obtain the necessary license for any cover songs they play.