What Every Bar & Restaurant Owner Should Know About Playing Music In Their Establishment
Updated: 6/26/09
The following question and answer guide was written by TMO legal fellowship intern Austin Hegarty during the summer of 2009.
Disclaimer: The Texas Music Office does not intend for this advice to provide or replace professional legal advice in any way. These suggestions are only intended to provide a short-answer reference guide to the basic legal and business practices associated with the music industry. In your own interest, consult with an attorney before entering into any contractual agreement or taking any action against copyright infringement.
Do I need a license to play music in my establishment?
Yes! When you purchase a CD, MP3 or similar product, you are granted the right to non-public performance of the material, such as at home or in your car. If you are using someone else’s copyrighted music, there is a moral and legal obligation to obtain their permission to do so. Although you may have paid for a copy of the music, or else are paying a DJ or live band to perform copyrighted music, you are still required by U.S. Copyright Law to obtain the proper licenses for the playback of the songs.1 There are a number of different customer licenses; deciding which license to acquire depends upon your particular intended use. 2
What happens if I broadcast copyrighted works without the proper license to do so?
If you choose to broadcast copyrighted material without the proper licenses, regardless of how long your establishment has done so without issue, it is very likely that you will face severe financial sanctions. If a copyright holder or a representative (employee of one of the major performing rights organizations; BMI, SESAC, ASCAP, etc.) is made aware of your establishment’s unlicensed broadcasting of songs, they can hold you liable for damages. Performing Rights Organizations routinely send representatives out into various unlicensed establishments to monitor playlists for music from their repertory. Damages for such infringements range from $750 - $150,000 per song played, depending upon the usage and song in question.
Such an infringement claim would come without warning, and many establishments have been forced to shut their doors as the result of sudden, high-dollar infringement claims. It’s worth noting that any individual suspicious of an unlicensed establishment may report it to the major performing
rights organizations for review and possible financial sanctions. As such, it is always in the best interest of your establishment to obtain the appropriate music licenses. Note that you do not need to have authorized a rendition of a copyrighted song, or even have been aware of its performance, in order to be held liable.
Certain establishments qualify for exemptions which do not require them to license the broadcast of radio or television transmissions. Note that, even if your establishment qualifies for an exemption for radio or television transmissions, this exemption does not extend to any
other copyrighted media that is played (CDs, MP3s, streaming audio, etc.) You are still required to obtain the proper licenses for those performances.
Does my establishment qualify for a license-exemption?3
The Fairness in Music Licensing Act of 1998 allows certain establishments to broadcast radio and television without seeking a formal license to do so. The exemption does not extend to the playing of CDs, MP3s, streaming internet audio, etc. 4
Gross square feet, as used by the Act, includes the entire interior space of the establishment, and any adjoining outdoor space used to serve patrons, whether on a seasonal basis or otherwise.
If your establishment is for food service or drinking, it must meet the following criteria in order to qualify for an exemption:
- Does not directly charge customers to see or hear the transmission (admission, membership fee, cover, minimum, entertainment, etc.);
- Has less than 3,750 square feet
If your business has more than 3,750 square feet, it qualifies for the exemption if it meets the following criteria for each media:
- Radio: You may have no more than 6 speakers in the establishment with no more than 4 in any one room.
- Television:
- No more than 4 televisions, with no more than 1 television in each room.
- No television may have a diagonal screen size greater than 55 inches.
- There can be no more than a total of 6 speakers in the establishment with no more than 4 speakers in any one room delivering any audio portion of the broadcast.
If you are an establishment other than food service or drinking, your business qualifies for the exemption if:
- There is no direct charge to see or hear the transmission (admission, membership fee, cover, minimum, entertainment, etc.)
- It has less than 2,000 square feet.
If your business has more than 2,000 square feet, it qualifies for the exemption if it meets the following criteria for each media:
- Radio: You may have no more than 6 speakers in the establishment with no more than 4 in any one room.
- Television:
- No more than 4 televisions, with no more than 1 television in each room.
- No television may have a diagonal screen size greater than 55 inches.
- There can be no more than a total of 6 speakers in the establishment with no more than 4 speakers in any one room delivering any audio portion of the broadcast.
Remember that even if your
establishment’s use of radio and/or television broadcasts falls within
the licensing exemption, you must still seek a blanket license for the
use of any other copyrighted work you play in your establishment (CD,
MP3, streaming internet audio, etc.) If your establishment does
not qualify for the radio/television, exemption, you must obtain a license
for any radio or television broadcasts.
If I only play music unlicensed by any of the performing rights organizations, do I still need to pay a performing rights organization for a license?
Technically, you do not.
However, whether or not this is logistically possible is still a matter
of debate. The major performing rights organizations control essentially
every piece of commercial music in existence, and beyond. Depending
upon your attention to detail and the nature of the unlicensed music
you will be playing, performing rights organizations have expressed
some skepticism over whether or not such practices could be reliably
undertaken. There are some success stories, however.
5 This type of arrangement seems to be most appropriate
for establishments seeking to exclusively promote local and un-signed
artists.
In deciding whether or not
to forgo a general license through a performing rights organization,
you must consider the actual importance of the media in question to
your customers. In many cases, the media an establishment broadcasts
has little to no impact upon customer satisfaction or profits.
In these instances, going the unlicensed route might be worth the extra
effort, particularly if the licensure costs for your establishment would
be prohibitively high. Performing rights organizations take a
number of factors into account in determining an establishment’s fees,
but size and capacity are among the factors most heavily considered.
In the article included in footnote 3, yearly fees were set at $200
for a coffee shop with a capacity of only 18.
I pay DJs and/or musicians to provide music at my establishment; do I still need to seek a license for the copyrighted songs they play?
Yes! Regardless of whether
you pay any DJs or musicians that perform in your bar, you are still
responsible for licensing the music they play with the appropriate performing
rights organization. There is a common misconception that the
responsibility for licensing such music falls upon those who are performing
it; this is not true. The performance of music in your establishment
is incident to the establishment’s operation and your profits.
As such, you have an interest in the music being played, and must obtain
the proper licenses in order to avoid any fines or penalties.
Acquiring a blanket license for this purpose would clear all the material
from each performing rights organization’s repertory, and would likely
be the most appropriate option.
How do I obtain a general or “blanket” license to broadcast music in my establishment?
In dealing with general licensing
for your establishment, you will ultimately obtain a “blanket license
agreement” which allows you to play all of the copyrighted material
in a given performing rights organization’s repertory. These
licenses were created as an alternative to the likely overwhelming alternative
of having to contact each individual copyright holder separately for
each song you wish to play.
Note that obtaining an individual license from one of the following companies only clears your use of that company’s material. As such, many establishments obtain blanket licenses from all three of the major clearinghouses; this effectively gives them the right to play any copyrighted piece of music in the existence. If you buy a blanket license, you pay a flat fee for the right to play the entire catalogues of each society. This covers your licensure requirements for all commercially released music. The 4 big performing rights organizations are as follows:
In order to determine which
performing rights organization is right for your establishment, remember
that a license from any one company only gives you the right to play
material from artists in their repertory, and that each company controls
rights to different works from different artists. As such, before
making a licensure decision to use a single performing rights organization,
you should think about whether or not there are any specific artists
whose material you would like to play in your establishment. Visit
each performing rights organization’s website and search their artist
repertory to ensure that you obtain a license from the company that
represents your preferred artist. The Getting Started in the
Music Business guide has more information about performing rights
organizations and license applications in its section on publishing.6
Are there any alternative groups through which I can obtain a general license to broadcast music in my establishment?
Yes; there are a few alternatives including jukeboxes and commercial music services that provide streaming audio and other media content. Whether or not a particular company’s services would be appropriate for your establishment depends largely upon your intended usage of the copyrighted material in question. For instance, many commercial music services have the ability to work on branding for your establishment. Here are a few different examples to get you started:
Jukebox Licensing:
- The Jukebox Licensing Office
- The Jukebox Licensing Office provides licenses for establishments that operate a jukebox or coin-operated, patron-controlled music playback device.
- Note that a Jukebox License is required for any jukebox you operate in your establishment; visit their website for more information regarding what constitutes a “jukebox.”
- The organization was launched as a partnership between the three major performing rights organizations and the AMOA trade organization for jukebox owners.
- A jukebox license gives an establishment the right to play all material from the BMI, ASCAP and SESAC repertories in their jukebox.
Note: If you provide a coin-operated jukebox in your establishment, you must secure a "general business license" from the Texas Comptroller's Office.
Commercial Music Services:
- DMX
- Multi-sensory branding; music, video, message and scent services to customize your establishment’s aesthetic.
- Extensive experience with large, high-profile clients.
- The first commercial music service to license and program original artist music.
- DMX are an Austin-based company.
- Muzak
- Muzak’s services most closely resemble satellite radio; they provide “programming” rather than individual songs themselves, and deliver the content by satellite, streaming internet, or physical CD compilation.
- The company caters more to retail and restaurant owners looking to have monitored, appropriate and licensed background music for the establishments.
- PlayNetwork
- Multi-sensory branding; music, messaging, video and entertainment.
- Ability to promote through promotions, podcasts, web radio and more.
- Retail Radio
- Retail Radio provides a proprietary web tool interface for visibility and control over licensed music & messaging using a secure (PCI Complaint), non-streaming (store it forward), and proven Ethernet or 3G/4G delivery platform.
- Multi-sensory branding; music, messaging, video, mobile web/sms/app development touch screen and audio-visual system install services to customize your establishment's aesthetic.
- Users can easily monitor what is playing at 1 or 100,000 locations.
1 http://www.copyright.gov/title17
2 http://www.ascap.com/licensing/termsdefined.html
3 http://cyber.law.harvard.edu/is02/readings/17usc110.html
4 http://www.copyright.gov/legislation/s505.pdf - (p. 4)
5 http://www.clevescene.com/cleveland/a-royalty-pain-in-the-ass/Content?oid=1472758
6 http://governor.state.tx.us/music/guides/tmlp/tmlp_publishing/