By: Pete Singh

Tunes can set the tone for your organization, but most music streaming services offered are B2C, meaning they are built for consumers, not businesses. Whether you’re setting the atmosphere in a restaurant, gym, house of worship, video, office space, or virtual space, it is important to make sure your use of music is authorized and legal. Songwriters, artists, musicians, publishers, and labels pour their hearts and resources into the creative process for our listening pleasure. We can honor those contributions by seeking out permissions, licenses, and paying whatever the price is. If we don’t, we run the risk of infringement claims, penalties, attorney fees, and incalculable harm.

Copyright law is a layered set of rules that provide protections for creators. It gives the author the exclusive right to copy, sell, distribute, display or perform the work, and prohibits infringement. In this digital age, it has become easier than ever to access music for personal consumption, but commercial use has its own set of rules. In this Music B2B series, we will cover topics and issues that businesses should think about before pressing play.

In this installment, we will provide an overview of music copyrights and licenses for businesses that may want to use music.

When you play (and even when you purchase) music on digital or streaming platforms like Apple Music, Spotify, Pandora, Tidal, YouTube, or any other, all you actually have is a license for personal, private, non-commercial use. You can listen at home or out and about, and share the music with friends within earshot, but you can’t make commercial use of music without paying for it.

What is commercial use? This term doesn’t just mean the song is included in a commercial or advertising spot, but includes just about anything and everything that is not considered fair use including commentary, parody, news, and similar uses, or an exemption from copyright law.

To play music for commercial purposes, not just in brick-and-mortar locations but also online, you need (1) a public performance license (PPL) from a performing rights organization (PRO) to use the composition, which is half of what music is made of, and (2) you also need a license to the master/sound recording, which is the other half. The point about one song having two separate copyrights for each song bears repeating. There is a musical work or composition on one hand, consisting of the lyrics, the melody, chord progressions, rhythms, and creative elements, and the master or sound recording of that composition on the other hand. Compositions are embedded within recordings, but they have standalone rights.

Playing music for an audience in your space requires a PPL from the respective PRO to play any given song. There are three main PROs in the United States with a fourth that’s up and coming – (1) Broadcast Music Incorporated (BMI), (2) American Society of Composers, Authors, and Publishers (ASCAP), (3) Society of European Stage Authors and Composers (SESAC), and (4) Global Music Rights (GMR). You could be fined or sued if you play a song from one of these catalogs without a license to do so. Each PRO has its own negotiable rates for access to its catalog.

Section 110(5)(B) of the Copyright Act lists categories of businesses that aren’t required to have licenses to play music from radio or television broadcasts. Food/drink spots and other small storefronts with certain square footage and/or a limited number of speakers/TVs unless customers are charged to watch and listen, but any other business needs a license to play music for the professionals or patrons.

If you’re not sure whether your business requires a license to use music in any way, it is a very fact-specific question and you will want to do research or consult with a lawyer to figure it out. Between composition, recording, publishing, performance, and synchronization rights, these many layers within a song, then songs within albums, albums within catalogs, and catalogs within repertoires, it can all be dizzying to navigate. In this series, as business and entertainment attorneys, we will try to provide some helpful general guidance and best practices, but make sure to ask questions if you have them.

Headquartered in the Research Triangle region of North Carolina, Fourscore Business Law serves entrepreneurs and businesses in the Triangle, throughout the Southeast and in Silicon Valley / San Francisco. We also represent venture capital funds and other investors who invest in companies throughout the U.S. The idea of delivering maximum impact in a simple and succinct manner is what we’re calling the Fourscore Principle. And that is what Fourscore Business Law is based on. Our clients operate in a broad range of industries including tech, IoT, consumer products, B2B services and more. Questions? Shoot us an email or give us a call at (919) 307-5356. Your first call is on us.