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Sunday, June 16, 2024

The Importance of Music Licensing for Small Businesses

Whether you run an exercise studio where pop music plays in the background or you livestream classes to your clients, you must have the proper music licenses. Without them, your business could face hefty fines or even legal liability.

Fortunately, there are ways to avoid these unwanted fines and legal headaches. One of them is to use a service that handles all of the PRO licensing on your behalf.

Copyright law protects creative works created by people, including businesses and organizations. It covers various materials, from text and photographs to computer software, musical compositions, and other audiovisual works.

Every person is a “copyright owner” when they create a work, and it usually belongs to them until they disclaim ownership or the copyright expires. However, work can also be owned by other people or companies.

Under copyright law, using a work without the original creator’s permission is illegal. This violation can result in statutory damages per song performed, so music licensing for small businesses is crucial.

If your business uses music for public performance, you must get a general performance license from the Performing Rights Organizations that represent music creators, such as ASCAP and BMI. These organizations will collect royalties from the source where a song is played and then distribute them to the music artist or writer according to how many times their music has been used.

There are also exceptions to copyright infringement, such as fair use, which permits specific services of copyrighted materials for non-commercial purposes. Courts generally consider three factors when deciding whether a use is proper: the goal, the nature of the work, and the amount of the service.

Licensing Options

Most small businesses require a combination of licenses and permission from both state and federal agencies. The requirements, fees, and timing for obtaining these documents depending on your business activities, location, and government rules.

A business license is vital for protecting your business from fines and penalties, shutting down your business, or being prosecuted for illegal activity. It is also essential to securing customer trust and building loyalty among consumers.

Having a business license is the first step in becoming a licensed seller, and it shows your customers that you are serious about your business. It can help you build customer trust and loyalty, which leads to higher sales and more repeat business.

If you have any questions about which licensing options are available to your business, talk with an experienced attorney who can answer your questions. They can also help you determine which licenses are necessary for your business and provide the documentation to prove it.

Reporting Requirements

It’s common for small business owners to create an ambiance in their storefronts with classical or relaxing music. This can make their customers feel more comfortable and happy, which increases sales and customer retention.

However, it’s important to note that playing copyrighted music in a business without obtaining a license from the appropriate performing rights organization is illegal. This is a violation of the federal Copyright Act.

Unless you’re in one of the few exceptions, such as stores under 2,000 square feet or restaurants and bars under 3,750 square feet, you must obtain a license for any music you play in your business. This includes AM and FM radio, broadcast television, and other audio devices that play music.

The most common PROs are ASCAP, BMI, and SESAC, representing various songwriters, composers, and music publishers. The PROs collect royalties for the performance rights of songs, which they send to the respective copyright holders.

The PROs regularly assign representatives to monitor playlists for establishments playing copyrighted music without a license. When they discover such violations, they send letters like this to owners, letting them know they need to obtain a permit immediately or face severe statutory damages per copyrighted work played in their establishment.

Compliance

If your small business plays recorded music or have live performances, you may need to get a license. This is because most music is copyrighted, meaning that one or more parties own the rights to it. Using it without paying the rightsholders can land you in serious legal trouble.

The best way to avoid this is by obtaining a license through performing right organizations or PROs. These organizations are the ones that track down and collect income on behalf of songwriters and publishers when they complete their songs.

In the United States, PROs include ASCAP, BMI, and SESAC. They represent hundreds of thousands of songwriters and publishers.

Performing rights organizations have reciprocal agreements with foreign PROs, such as the Society of European Stage Authors and Composers (SESAC) and PRS. When you purchase a license from these PROs, you can use all the songs in their repertoire.

However, there are exceptions for specific uses. For example, if your small business has less than 2,000 square feet and you do not charge customers to hear the music, then section 110 (5) of the Copyright Act allows you to play radio and television broadcasts for background music in your business.

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