11 questions about music licensing

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Music is one of the most important elements to establishing the mood in your restaurant. But make sure you have the necessary licensing to comply with copyright statutes. Performing rights organizations, such as BMI and ASCAP, act as intermediaries between restaurants and performing arts to protect intellectual property. Restaurants pay a fee to the performing rights organizations, which return most of the fee to songwriters, publishers and composers.

Here are answers to frequently asked questions about music licensing:

Q. If I pay a licensing fee to BMI, do I have to pay one to ASCAP as well?

A. It depends. If you know that all music played (or to be played) in your restaurant is under the copyright licensing of BMI, then the answer is “no.”  However, if that music is licensed by either of the other two major licensing entities, ASCAP or SESAC, the answer is “yes.” If you aren’t certain about what music may be played because of live bands or karaoke, then it’s safest to have a licensing agreement with all three organizations.

Q. What are the exemptions?

A. Federal copyright law, Section 110 (5)(B), exempts restaurants that play music transmitted via radio, TV and cable and satellite sources if they don’t charge to hear the music. Music played by other means, such as live bands, CDs, etc., aren’t covered by the exemption.

The exemption applies to establishments  smaller than 3,750 gross square feet in their premises. It also applies to those with 3,750 square feet or more of gross square footage if the operation has no more than four televisions. In those cases, each screen must be no larger than 55-inches diagonally. Each room must have no more than one television, and no more than four speakers, with a maximum of six speakers in the operation.  “Gross square footage” includes all interior and exterior space used to serve customers, including kitchen space, bathroom and storage space, but excludes the parking lot (unless used for something other than parking).

Q. If I offer only live music once a month, do I need to pay licensing fees?

A. While the exemption in the statute doesn’t specifically address this question, the answer is likely “yes.” Generally, the exemption doesn’t apply to exclusions and situations not covered in the exclusionary language.

Q. I use Pandora for music. Do I have to pay a fee?

A. Pandora’s “terms of use” specifically prohibit businesses from streaming music without setting up and complying with the terms of a paid DMX/Pandora business account.  Although DMX states that it “shall pay applicable license fees (as applicable) for your use” of the Pandora streaming music via the DMX/Pandora business account, we suggest restaurateurs check with the major licensing societies (BMI, ASCAP and SESAC) to ensure they agree that your use is permissible without separate licensing-agreement obligations.

Q. BMI is threatening to sue me. What can I do?

A. That depends on whether you qualify for the exemption. If not, you should discuss an appropriate license fee, which depends on the size of your restaurant, average number of customers per day, hours and days of operation, gross earnings and other factors. If you qualify for the exemption, explain why you qualify to BMI.

Q. Do licensing companies share lists? If I pay one, will the others know and bill me?

A. Theoretically, no. Normally, a business’ customer list is considered proprietary and confidential, and so it seems doubtful that licensing societies would share customer lists with each other.

Q. What size businesses are exempt from paying fees?

A. The “size” (depending on how this word is defined) might not apply to the exemption (see the second question).

Q. My small restaurant with no seating has a television for employees only. Am I exempt?

A. Licensing obligations apply only if the communication of the music is “intended to be received by the general public.”  If only your employees hear the music, the transmission isn’t intended to be heard by your customers or the “general public.”

However, customers can hear the music when they pick up their take-out orders, ASCAP, BMI and or SESAC could argue that the “general public” receives the transmission as well as staff and that licensing obligations apply.

Q. I don’t understand the rules about number of seats and exemptions.

A. The number of seats isn’t relevant to the exemption under Section 110 (5)(B) of the federal Copyright Act, although it might be a factor in determining the license fee.

Q. If I use my own iPod and have paid to buy the music, do I need to pay licensing fees as well?

A. An iPod is mainly plays pre-downloaded music and other audio files. Assuming the owner of the iPod transmits it in the restaurant for customers, it doesn’t appear to qualify for the exemption under Section 110 (5)(B) of the Copyright Act because the transmission or retransmission didn’t originate from a radio or TV broadcast station or cable or satellite carrier.

However, you might want to check with Apple whether purchasing music from iTunes for your iPod relieves you of an obligation to have a license agreement with ASCAP, BMI or SESAC.

Q. I play only a few albums from the 1950s. Do I still have to pay?

A. It depends on the music on the albums. If an album doesn’t include music licensed by ASCAP, BMI and SESAC, you aren’t obligate to sign a license agreement with them. However, you might have an obligation to the artists whose songs appear on the albums

If the albums contain any music under the copyright control of ASCAP, BMI and/or SESAC, or you transmit music via other means, such as live bands, a licensing obligation likely will exist.

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