Playing background music at your cannabis retail; hiring bands to play at your taproom; or perhaps pumping music at your bar? Then you need to know a thing or two about music licensing.
One of the first steps in understanding music licensing is knowing that a ‘song’ is the lay term for the combination of a musical composition to a sound recording. The musical composition is the melody and any accompanying lyrics fixed in a tangible medium of expression (i.e. written down), while the sound recording is the recorded rendition of the musical composition. The musical composition is owned by the songwriter or his/her/their publishing company, while the sound recording is generally owned by the record label that released the recording.
If you are a business playing music in your brick and mortar establishment that is open to the public (bars, retail shops, restaurants, tasting rooms), then you almost certainly, with very few exceptions, need to understand copyright law’s public performance right. Title 17, U.S. Code § 106(4), affords the owner of a copyrighted work the exclusive right to perform the copyrighted work publicly.
To ‘perform’ a work means to "recite, render, play, dance, or act it, either directly or by means of any device or process” and transmit it in a manner designed for contemporaneous perception. Title 17, U.S. Code § 101.
To perform a work 'publicly' means "(1) to perform or display it 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; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." Id.
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The public performance right is generally available to musical compositions, but the copyrighted sound recordings lack a general public performance right in favor of a more limited digital performance right. What this means is that the holder of a copyright in the musical composition has a right to control public performance in a wide variety of situations, while the sound recording copyright holder can only control public performance of the sound recording when it is transmitted to the public through digital means. This is a unique quirk of United State copyright law.
However, unless you are broadcasting AM/FM radio at your business, which we will discuss a bit below, you are likely transmitting the sound recording through digital means – meaning that the performance of both the sound recording and the musical composition are controlled by the copyright owner, and subject to royalty payment obligations for those wishing to publicly perform the work.
At this point, you may recognize that bands who cover a ‘song’ do not in any way implicate the sound recording, so you may wonder if hiring live music instead of playing digital music is an avenue to avoid licensing. Although live music does not infringe upon the sound recording if a cover song is played without a license, doing so still violates the public performance right of the musical composition owner. As the business owner, you can require that bands play only original music to avoid copyright infringement, or require that the band obtains a mechanical license if they intend to play covers. While cover bands, who solely play covers of one particular band, will likely have obtained a mechanical license to publicly perform those musical compositions, most bands will likely not have obtained such a license. As the owner of the business benefitting from the public performance, you are ultimately responsible for any infringement by the bands hired to perform at your establishment because the band’s performance is incident to the operations of your business and profits.
In order to avoid potentially expensive copyright infringement claims, you can seek to obtain a license directly from the owner of a copyrighted work (the time and effort of which will provide prohibitive) or license the music you wish to play in your establishment through a performing rights organization, such as ASCAP, BMI, or SESAC, which charge you a fee to license their entire catalog and then distribute royalties to songwriters and publishers for the public performance of that catalog. Fair warning, although the catalogs of each organization are incredibly extensive, it is possible that in order to fully cover all the songs you intend to publicly perform, you may need a license from more than one organization. If you don’t hire live music, another option for your business is SiriusXM Music for Business – the license fee is included in your subscription.
You may be wondering if there are any exceptions to expensive licensing obligations. There are, but they are incredibly limited. The Fairness in Music Licensing Act of 1998, codified in part at Title 17, U.S. Code § 101(5), 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.
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:
You may have no more than 6 speakers in the establishment with no more than 4 in any one room.
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 or drink service 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:
You may have no more than 6 radio speakers in the establishment with no more than 4 in any one room.
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.
Fair use and incidental use are other exceptions in the Copyright Act that permit certain limited uses of copyrighted works without infringement. Determining whether fair or incidental use applies to exempt your public performance requires a detailed, fact-specific evaluation based on developed case law. However, these exceptions likely will not apply to a business use open to the public, primarily because the use is tied to a commercial purpose, and the use is both intentional and utilizes the work in its totality. This is an incredibly truncated analysis of fair use and incidental use in a commercial setting, but the end result is nonetheless that you shouldn’t expect to fall within these exceptions.
Copyright infringement claims for musical compositions and sound recordings can result in judgments starting at $750.00 per infringing use, which can add up to hundreds of thousands of dollars very quickly. However, if you find yourself in a position where you are contacted by a performing rights organization for playing unlicensed music, be aware that RCW 19.370 regulates the type of conduct these organizations can engage in when communicating with you and the steps they must take before seeking payment of royalties from you. Washington levies fines on performing rights organizations whose representatives use “obscene, abusive, or profane language” or “engage in coercive conduct” in an effort to obtain a license payment from you.