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Music Licensing For Businesses: Real or Scam?

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Music Licensing For Business: Real or Scam?

frustrated-business-owner-billed-by-ascap-bmi-sesac

You may know that music used in a business must be licensed. ASCAP, BMI and other performance rights organizations (PROs) are tasked with collecting performance rights licensing fees on behalf of music publishers. These organizations have been stepping up their collections activity, sending letters and making phone calls (in some cases showing up in person). But if you receive a collections letter from a music licensing group, how can you tell if it’s real or a scam?

Who Must Pay Music Licensing For Businesses?

If your business facility uses music in any way, you must pay “performance rights” to the organizations that represent the publishers of the music. The only exception is for broadcast radio and tv in businesses under 2000 square feet (3750 square feet for restaurants). There may be additional fees  based on your type of establishment. For example, if you own a restaurant or bar that features live music, if there is a fee for entering your establishment, or if there is a physical activity coordinated with the music (such as a public skating or dancing).

Small Business Music Licensing

In an excellent article published by the Palo Alto Area Bar Association, business owners are informed, “If the music sound is clearly audible in the space designated for customers, the playing most likely infringes the [music] owners’ exclusive public performance rights in the sound recordings.” This means that use of music, even for a small business, creates a copyright infringement and therefore is a liability, both legally and financially.

PROs Request Fees

There are many instances of PROs (ASCAP, BMI, SESAC) requesting fees from businesses who are taken by surprise by a collections letter. One business told us, “I am constantly being billed by ASCAP and accruing late charges…” Is it legitimate? Yes, ASCAP and other PROs definitely do ask for licensing fees, whether or not you are using music. They generally make the assumption that you are using music for overhead listening or on your telephone hold button, and send a letter something like this:

Music Licensing Letter Request

The above excerpt is from a real letter from ASCAP to a small business, and is not unusual. In the fall of 2014, the Louisiana Restaurant Association reports they had “fielded a number of calls from members who received bills from ASCAP for playing music.”

San Francisco Chronicle reporter as a young restaurant employee, he received a call from ASCAP asking for licensing fees. He says, “About a week later, our restaurant received a demand notice for payment of fees to ASCAP.”

A New York Times article on music licensing says, “a significant portion of BMI’s business is to “educate” and charge — by phone and in person — the hundreds of thousands of businesses across America that don’t know or don’t care to know that they have to pay for the music they use.”

How To Tell A Real PRO Music Licensing Fee Request From  A Scam

If you have received a letter or email asking for music licensing fees, take some time to do a followup with ASCAP, BMI or SESAC.

  • Do not respond to an email or open any attachments to an email that comes from an unfamiliar source.
  • Legitimate PRO licensing requests will come in the mail, in writing
  • You will be given an account number for reference
  • Call ASCAP at 1-800-505-4052, BMI at 800-925-8451, and SESAC at 1-800-826-9996. Provide the account number and your business name as a test
  • If you are in Canada, contact SOCAN at 1 866-944-6210

Recently a friend received an email that appeared to come from PPL, a PRO in the UK:

Dear Customer,
Please find attached your PPL invoice for your licence to use recorded music (whether via CDs, Radio/TV broadcasts, background music systems or other sources) at your premises.
Permission to use PPL repertoire under the terms of the licence will only be effective once payment has been made. Payment of your invoice can be made online at ppluk.com/payonline or you can call us on 020 7534 1070 to pay by credit or debit card. All payment methods can be found on the back of your invoice.
This is an automated email. If you have any queries about the invoice or requirements for a PPL licence, please refer to the contact information below.
Yours faithfully, PPL Customer Services

First of all, he does not do business in the UK and therefore does not have to pay PPL. Secondly, the email included an attachment that looked like a word document. Opening attachments from unknown sources is a bad idea; the PROs know this. They are not likely to send a document in an email unless they have spoken to you in person first.

Decision Time: Pay Now Or Later?

No matter how big or small your company may be, you will need to make a decision regarding music licensing for your phone-on-hold audio as well as music played in your space. The Palo Alto Area Bar Association article mentioned earlier says, “Small mom and pop stores, for whom legal advice may be prohibitively expensive, must then decide whether to pay the PROs or disregard the letter and possibly face a court action for copyright infringement,” and “In view of the potential risks of an infringement lawsuit and the cost associated with litigation, which may run in the tens of thousands of dollars, the better course of action may be to enter into a licensing agreement with the PRO.”

But there is another, more affordable solution you should consider…

Solution: Use A Music Provider That Pays Fees For You

Easy On Hold enters into a music license agreement with the creators of high-quality music for phone on hold backgrounds. In recent discussions with Chuck Ansel, Vice President of Operations for Universal Publishing Production Music, we confirmed that no PRO is due any music licensing fee whatsoever, as long as the only music being used has come through Easy On Hold as licensed through Universal. In other words, if you use Easy On Hold as the source for your music on hold, and receive a request to pay fees from a PRO, just send the request to us and we will stop any attempt to collect. All Easy On Hold customers are completely covered for performance licenses for the music provided.

For overhead background (in-store) music, Easy On Hold represents Brandi Music, streaming music for business. Brandi Music covers all licenses, and explains on its website that it “is a simple solution that relieves your business of the legal liability of playing copyrighted material.”

Pandora, iTunes And Other Illegal Ideas For Playing Music In Your Business

A quick trip to the Pandora terms of use page will tell you, “…Pandora is for personal use only. That means you can’t play Pandora for the patrons in your bar, coffee shop, etc.”  There is a business version available, but it does not offer many of the most popular Pandora features and requires a proprietary listening device.

Spotify also says it is not for commercial use. They are working on a commercial version, but even then it won’t cover the PRO licenses, saying in a web release, “The performing rights must still be paid”. Besides, the service isn’t available yet and there is no announced launch date.

Audio CDs or mp3s? Not legal, because you are still “performing” the music, for which there is a separate license fee on top of purchasing the audio (in any form).

Satellite radio is also not a legal use of music in your business. Again, the subscription to a satellite (SIRIUS/XM) is typically for personal–not business–use. Like other services, a business-only version is available for a higher price.

Of course, you could simply do nothing. But after reading this article about a business that was fined $30,450 for playing four “illegally played songs” plus $10,700 in legal fees, you’ll probably think again. The local TV News reports in this video: http://www.wral.com/news/local/wral_investigates/video/9988095/

Contact Information

If you’re looking to play music legally in your business, get some helpful details and pricing from Brandi Music first. Contact Brandi Music. Music licensing for businesses is serious business.

For more articles on this topic, please read Blog articles on  Music Licensing by Easy On Hold or view the Learn section of easyonhold.com that refers to music licensing.

Entrepreneur Magazine: What You Need To Know About Music Licensing For Your Business

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Founder of Easy On Hold and Brandi Music. Thinker, writer, speaker, tinkerer, husband, father, musician.

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