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Music Licensing for Your Business

BMI Section Updated: 2.28.24, Other Sections Updated 3/1/12; 6/26/09

The following question and answer guide was written by TMO legal fellowship intern Austin Hegarty during the summer of 2009, and updated by TMO legal fellowship intern Michael Arase in spring 2012.

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 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 proper license?

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 comes 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. 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 a 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 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 (background music) 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?

If you are going to broadcast licensed music in your place of business, you will likely need a “blanket license” which allows you to play a performing rights organization’s repertory. These licenses were created as an alternative to the overwhelming alternative of having to contact each individual copyright holder separately for each song you wish to play. Whether you run a club, bar campus radio station, or streaming online radio show, you will want to familiarize yourself with the licensing specifics from ASCAP, BMI, and SESAC.

Note that obtaining an individual license from one of the following companies only clears your use of that company’s material. 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:

ASCAP

ASCAP licensing types ASCAP does not post licensing information on their website, but if you would like to receive a copy of the listed licenses (see ASCAP licensing types) contact ASCAP at: http://www.ascap.com/licensing/license_request.aspx

  • (800) 505-4052 (General); (800) 992-7227 (Broadcast) Two types of licenses Blanket license – licensees pay an annual fee for access to the full ASCAP library. This saves the user from paperwork, and the trouble and expense of finding and negotiating licenses with various individual copyright owners.
  • Per program license – you have access to the full ASCAP library, as in a blanket license, but is designed to cover use of ASCAP music in a specific radio or television program. Requires that you keep track of and report the amount of music content used. These are generally less expensive. The annual rate for licensing fees is dependent on the type of business, manner in which the music is performed (live, recorded or audio only or audio/visual), and size of the establishment or potential audience for the music. Rates for restaurants, nightclubs, bars, and similar establishments depend on whether the music is live or recorded, whether it’s audio only or audio visual, the number of nights per week music is offered, whether admission is charged and various other factors.
  • Concert rates are based on ticket revenue and seating capacity of the facility.
  • Rates for music used by corporations are based upon the number of employees.
  • College and university rates are based upon the number of full-time students
  • Retail store rates depend on the number of speakers and square footage. Hotel rates are based on a percentage of entertainment expenses for live music and an additional charge if recorded music is used. ASCAP’s radio and television licenses do not cover music performances via the internet. ASCAP offers three different license types for “new media” performances. Interactive 2.1 – intended for services that perform music in an “interactive” manner (meaning performances of specific songs or musical works are selected by users) E.g. on-demand performances, custom radio Non-Interactive 5.1 – intended for services that perform ASCAP music in a “non-interactive” manner (meaning performances of specific songs or musical works are not selected by users) E.g. webcasts, streaming background music, previews or “samples” (song excerpts less than 60 seconds) Multi-Site – gives owners/operators of multiple services in need of ASCAP licenses the convenience of entering into one license to cover all services. Generally qualifies for a license fee discount. Use the ASCAP RateCalc to assist you in calculating your ASCAP “new media” license fee ASCAP operates under the principle that similarly situated users should be treated similarly, assuring fairness and consistency in licensing.
     

BMI 

Celebrating over 80 years of service to songwriters, composers, music publishers and businesses, Broadcast Music, Inc.® (BMI®) is a global leader in music rights management, serving as an advocate for the value of music. BMI represents the public performance rights in over 20 million musical works created and owned by more than 1 million songwriters, composers, and music publishers. To learn more about licensing the music in your business visit www.bmi.com/licensing. Email business@bmi.com or call (888) 689-5264 to contact a BMI representative. 

Below is a non-exhaustive list of businesses that BMI licenses. 

The annual rate for licensing fees is dependent on the type of business, way the music is performed (live, recorded or audio only or audio/visual), and size of the establishment or potential audience for the music.


SESAC

SESAC, unlike ASCAP and BMI, does not operate under a consent decree, therefore their rates are negotiable.

  • Obtain a SESAC license General Licensing Amusement parks, arenas/stadiums, bowling centers, colleges/universities, concert promoters, convention centers, country clubs, dance studios, festivals, health/fitness centers, hotels/resorts, retail shops, racetracks, restaurants (night clubs, sports bars, taverns), malls Internet Licensing Internet and other forms of new media
  • For stations that want to stream over the internet, an additional license – the SESAC Internet Performance License – is required. Authorizes public performance of SESAC-affiliated music on websites that stream music or contain music videos, song previews, or clips.
  • License fees are calculated using the station's Aggregate Tuning Hours or a formula based on a station's revenue Broadcast Licensing
  • Radio, non-commercial radio, low power FM, cable Television Licensing Primary channel blanket license, primary channel per program license, station website license, digital multiplex license The annual rate for licensing fees is dependent on the type of business, manner in which the music is performed (live, recorded or audio only or audio/visual), and size of the establishment or potential audience for the music.
  • SESAC offers an "all-talk" amendment that reduces fees for radio stations/televisions that are primarily talk/news programs and only use music occasionally.

    SoundExchange Visit http://www.soundexchange.com/service-provider/ to explore the different license types for your particular service operation Click on the "click here for more info" link under each category to see where your establishment fits
  • If you are a new service and need assistance finding the correct forms after reviewing this site contact the Licensing and Enforcement Department for further assistance at: (202) 559-0555
  • Each performing rights organization charges a fee for its licenses. This money is then paid to the composers of the respective musical works used. ASCAP and BMI fees are negotiated and set by the Copyright Royalty Board (link), whereas SESAC, a for-profit company, negotiates individually for the rates it charges.

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

    Note: If you provide a coin-operated jukebox in your establishment, you must secure a "general business license" from the Texas Comptroller's 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.

Commercial Music Services:

  • Mood
    • 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 is an Austin-based company specializing in multi-sensory branding, recently purchased by Mood.
  • Muzak
    • 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.
    • Rockbot
      • Rockbot plays customized background music for business that engages customers directly on their phones.
      • Mobile apps for customers to vote on the music and for managers to keep full control.
      • Licensed music for business with ASCAP, BMI & SESAC.
      • Social media buzz as customers share plays online.
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    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 /music/page/tmlp_publishing/