Hold Music Licensing: Real or Scam?

How to avoid huge fines for playing music on hold.

Has your business received "the letter"?

letter from licensing organizations

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?

There are many reports of PROs (ASCAP, BMI, SESAC, GLOBAL MUSIC RIGHTS, SOCAN) 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? In most cases, yes. That is to say, 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.

Are you properly licensed?

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.

New York Times

Do you need a license to play music on hold? Yes.

All on-hold music must be licensed. If you use an on-hold service, make sure that service can prove the music is licensed for your use on your phone system. ASCAP says, "When you place a caller on hold and transmit music via your telephone lines, that is a public performance of the music. It is your responsibility to obtain permission to perform ASCAP songs from ASCAP or directly from the copyright owner. ASCAP represents tens of thousands of copyright owners and millions of songs and an ASCAP license will give you the right to perform them all."

Do you need to pay ASCAP? Not necessarily.

You can pay a music on hold provider like Easy On Hold®, in which case your provider is assuring that all applicable licenses are paid on your behalf.

Do ALL music on hold providers cover my license? No.

Some royalty-free music does not cover the performance rights, which are the rights you need to play the music on your phone. Royalty free generally means that the company purchasing the music does not pay ongoing fees for the rights to use the music in their auduio and/or video productions. You must be certain that the rights to perform music on your phone system are included in any music on hold fees charged by a vendor.

What about playing a radio station—is that OK? No.

Radio stations pay licensing that covers music they broadcast. It does not cover music you re-broadcast on your phones. Using a radio on-hold is common. Many times a telephone system technician will hook up a radio for use on-hold, knowing that music royalties are "not his problem". Most people using radio on hold probably are not aware that they're in violation of any laws, in that they assume the radio station has already covered all licensing costs on their end. The spirit of the law is that responsibility falls to the end-user, so your re-use of a radio station is considered a "re-broadcast" and is therefore subject to fees.

How to avoid fines for playing music on hold.

A custom on-hold contract from a reputable on hold company is the only way to be confident that you are properly licensed.

Worth the cost? Even with the more powerful marketing potential custom music on hold messages provide, the cost is significantly less than national music services, do-it-yourself solutions, or (gulp) fines and fees.

What if your business gets a letter from ASCAP, BMI or other PRO?

If you get a letter from one of the performance rights organizations, contact Easy On Hold®. We have ongoing relationships will all licensing organizations and know how to spot an authentic letter. The letter you receive will contain specific information, including a case number we can use to find out what is going on.

It is true that ASCAP sends out letters requesting complainces. And they aren't the only music licensing group out there knocking on doors. BMI is one of the other licensing organizations in the U.S., and they're looking to collect fees for playing music in your business.

Recently an Easy On Hold client contacted us for help with inquiries made by BMI. Here's a look at the email from the accounting department:

"We continue to get pestered by BMI, they are a music licensing organization. Easy on Hold actually references them in their literature. The latest call from BMI basically is saying that just because you buy hold music, it doesn't mean that you don't owe licensing fees. I have no idea how this works, but I would suggest you reach out to your contact at Easy on Hold, and see what the law is on this. Chief Financial Officer"

The Myth Behind Royalty Free Music

Actually, BMI is right: just because you buy hold music does not mean that you don't owe licensing fees. This is a big myth behind "royalty free music". You may be purchasing music that is free of mechanical royalties (meaning you can copy it, download it, manipulate it), but it may not include performance rights. These performance rights are the fees BMI is attempting to collect here.

Rest assured, Easy On Hold® is paying performance fees on behalf of all of our clients. Note also that BMI and ASCAP are both very active in seeking fees and fines. Apparently, licensing organizations do no research prior to contacting a business to request money. This means they are randomly calling any business that looks as though they could come up with some form of payment.

Issue Resolved

This issue was quickly resolved by the Easy On Hold Music On Hold Expert providing written proof of performance rights. The response from the client:

"Talked with Julie from Easy On Hold. She provided the document which verifies legitimacy of the license, etc. Thank you for your prompt and courteous support. EOH is one of my favorite vendors. -Theresa"

Music in your business (background music) is also being targeted by licensing organizations.

Retailer Threatened With $400,000 Fine

How would you like to be informed that you have been sued for $400,000 for playing music in your store? Larry Leigh, owner of Leigh's and Mettie's womens clothing stores in Grand Rapids, found out the hard way about penalties for unlicensed music use. He received a letter from licensing organization ASCAP stating that he was violating copyright regulations by playing music from CDs in his stores. Unfortunately, Leigh got some bad advice from the business that installed his store stereo system, having assured assured him he didn't need to worry. Two years later, he was sued by ASCAP for $400,000. His attorney informed him that his chances of winning the suit were not good, he settled out of court for a $5,000 fine.