With the variety of options for delivering quality sound and just as many audience targeted genres, music is a popular way for a business to enhance the customer experience. However, keep in mind that, in a commercial environment, owners and operators generally can’t play it unless they pay for it.

This information is designed to help explain a proprietor’s obligations under copyright law, but it is not intended as a substitute for legal counsel on specific copyright issues.

Rights Organizations

In order to effectively and efficiently enforce their rights under the copyright laws, American (and many foreign) composers, lyricists and publishers usually join one of three performing rights organizations. They include the American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music Inc. (BMI) and the Society of European Stage Authors and Composers (SESAC) Inc.

These groups grant licensees the right to publicly perform the works of all their members or affiliates, for whom the societies collect and distribute fees for the licenses granted. More than 85% of the fees collected by the two largest organizations are paid to composers and publishers as royalties for the performance of their copyrighted works.

Performer’s Rights

ASCAP’s, BMI’s and SESAC’s rights, and performance rights, are non-exclusive; individuals or entities that wish to may negotiate separate royalty agreements with individual composers/publishers to perform their music.

However, when faced with the prospect of expending time, effort and money in trying to negotiate separate licenses directly with each composer or publisher whose music will be performed, most businesses using publicly performed music will choose to get a blanket license from one or more of the performing rights organizations. A blanket license permits the license holder to perform any or all the works in the performing rights organization’s repertory. If a choice is made to publicly perform only music that is in the public domain — that is, music that is no longer or never was protected by copyright — no license is necessary.

Why You Have to Pay

The short answer to why you have to pay is: Because the law says you do. However, clearly, some further explanation is needed as to why, for example, a merchant has to pay to play radio music in his or her store, when playing the radio or listening to tapes at home or in one’s car is “free.”

The long answer starts with the United States Constitution, which gives Congress the power to grant patents and copyrights. The Copyright Law of the U.S. gives copyright owners the exclusive right to publicly perform or authorize performance of their works.

Generally speaking, public performances are very broadly interpreted under the law and are defined as performing “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” This has been interpreted to mean that most performances at so-called private clubs and fraternal organizations are “public,” at least under the copyright law.

One notable exception is the broadcast of a radio or television transmission by eating, drinking or retail establishments of a certain size which use a limited number of speakers or televisions, and if no charge is made to see or hear the transmission. Performances at charitable functions are exempt from license or royalty requirements only if the performances have no direct or indirect commercial advantage; and if no one involved with the performance, including any of the events’ performers, organizers or promoters, is paid, and there is no direct or indirect admission charge.

A list of places and events at which licensing could be required includes, but is not necessarily limited to, restaurants, bars, clubs and hotels where live or recorded music is played; shopping malls; stores that play broadcast or recorded music; spas, gyms or other sites that offer exercise to music; trade shows; conventions; dance studios; skating rinks; private clubs or fraternal organizations; offices and stores that use “music on hold” for telephone customers; sports teams; colleges and universities; amusement parks; bowling centers; and the Internet.

In addition, licensing is also required for those businesses traditionally associated with the performance of music, such as radio and television networks and stations, concert promoters and the like. The organizations license only the “non-dramatic” performance of their writers’ and publishers’ music. They do not have the right to license public performance of “dramatico-musical works,” such as operas, musical comedies; or other forms of musical theater, which are licensed directly through publishers or other copyright holders.

A businessperson should consult with an attorney about any questions as to whether the music he or she plans to play publicly is exempt from liability for royalty payments.

A System Broken

There is agreement among artists, digital services and the government that today’s system is broken. A February 2015 report by the U.S. Copyright Agency has made some recommendations for change.

However, it will literally take an act of Congress for change to occur. Until then, the proprietor, and anyone at the business who is responsible for the infringement, is liable.

So, if a business contracts for a service that “pipes in” background music, either by providing tapes or transmitting to subscribers’ premises through radio or satellite special equipment, the service, which collects its fees from subscribers, is responsible for obtaining the appropriate licenses; unless the establishment itself charges for admission, in which case the owner must obtain the licenses.

Angie Barnett is president and CEO of the Better Business Bureau of Greater Maryland. She can be reached at 410-347-3990 and abarnett@greatermd.bbb.org.