Using Music in Your Small Business

A small business that offers performances of copyrighted music requires a public performance license from the copyright owner of that music. This licensing requirement extends to all types of small businesses including barber shops, restaurants, retail stores, and gyms. It doesn’t matter whether the small business offers the music from a live band, CDs, a DJ, or the owner’s iPod playlist.

Public Performance Licenses for Songs Are Easy to Obtain

The good news is that the small business owner does not need to hunt down the copyright owner of each song for a license. That’s because most songwriters and their music publishers affiliate with a performing rights organization (PRO) and those PROs issue public performance licenses on the songwriters behalf.

The United States PROs are ASCAP, BMI, and SESAC. Each PRO issues blanket licenses that allow venues to perform any song in the catalog of that PRO. The cost of the blanket license depends on how extensively the small business uses music. The blanket license for a nightclub will be more expensive than the blanket license for a grocery store that wants background music for shoppers.

What Happens to Small Businesses that Play Music Without a License

Small business owners should take seriously the public performance license requirement. PROs do monitor compliance. Since business owners do not always understand how they can and cannot legally use music within their establishments, the PROs do incorporate music licensing 101 training into their tactics.

However, when businesses fail to comply, as a last resort, PROs have been known to send an agent to the establishment, note any songs from the PROs catalog played by the establishment, and then sue the establishment for copyright infringement. Those lawsuits typically result in the business paying a damage award of a few thousand dollars for each song played so businesses should take the PROs demands seriously.

Some Exceptions and Alternatives to Licensing

There are some circumstances in which a small business would not need a public performance license in order to offer music:

Fairness in Music Licensing Act/Home Style Exemption Act. A small business can play the radio as long as the establishment does not charge patrons a direct fee for hearing the radio broadcast. For this exception, there may be limits on the number of speakers used in an eating establishment that is over 3,750 gross square feet or in a non-eating establishment that is over 2,000 square feet.

Muzak. Piped-in music service such as Muzak may be suitable for businesses that want only background music. The music service takes care of obtaining all the necessary licenses.

Live Performances of Songs in the Public Domain. Offering performances of songs that are no longer copyrighted might work for establishments whose patrons like live performances of classical music.