Music Licensing 101: The Basics for Hotel & Restaurant Operators
The General Rule: Copyright Owners have the Exclusive Right to Perform their Music
Under federal copyright law, the owner of a music copyright has the exclusive right to “perform the copyrighted work publicly by means of a digital audio transmission.” 17 U.S.C. § 106(6). If you play music in your business, you may be liable for copyright infringement if you do not first obtain a license from the copyright holder or from a performance rights organization. Generally, it does not matter:
- that there is no admission charge
- that the music is performed live or played by a DJ, KJ, or karaoke machine
- that the music is played in a private club
- that the music is played in an area of your business only accessible by key (such as a fitness center or pool)
- that you do not know the music is being played
- that the music emanates from a television or radio broadcast
Furthermore, if your business is a corporation, its officers and directors may be personally liable for the business’s infringing acts.
Exceptions to the General Rule
There are some important exceptions to the general rule that may apply to your business. Some of the exceptions come with potential pitfalls, so if you have questions about whether a particular exception applies to you, we encourage you to contact one of our attorneys.
The “Homestyle” Exception
Under the homestyle exception, qualifying businesses may play radio and television broadcasts without a license, so long as no direct fee is charged to see or hear the radio or television. The exception applies to cable television; it likely includes satellite radio as well (since the exception applies to stations licensed by the FCC, and satellite stations are so licensed). It does not, however, apply to online radio services (such as Pandora), and it does not apply to non-broadcast forms of transmission such as CDs, live music, and karaoke. 17 U.S.C. §§ 110(5)(B)(i)–(ii). How the exception applies to your business depends on the size (square footage) of your location:
The homestyle exception for small businesses applies to restaurants and bars with less than 3,750 gross square feet of space (excluding parking lots) and to other types of establishments with less than 2,000 gross square feet of space (excluding parking lots). These business can, without a license, play radio and television broadcasts, apparently without any limit on the number of speakers or televisions used.
If your business is too large to qualify for the small business “homestyle” exception, you may still play broadcast television and radio, so long as the equipment used is limited as follows:
The Vending Establishment Exception
The vending establishment exception may apply if your business contains a gift shop that sells music. If so, this exception allows you to play copyrighted music for the sole purpose of promoting the retail sale of copies of the music. To qualify for the exception, your business must be open to the public at large, you must not charge any direct or indirect admission charge, and the music must not be transmitted beyond the immediate area where you sell copies of the music. 17 U.S.C. § 110(7).
Licensing through Performance Rights Organizations
If your business does not qualify for an exception, you must obtain a license from the copyright owner before playing copyrighted music. The most common way to do this is to purchase a subscription from a performance rights organization (“PRO”) that is authorized to collect royalties on behalf of a portfolio of copyright holders. The largest PROs are BMI, ASCAP, and SESAC. Before deciding whether to purchase subscriptions from all three of these companies, we recommend that you visit their websites and review their copyright portfolios. You may be able to save money by playing music from only one PRO’s portfolio—in which case you would only need to purchase that PRO’s subscription. You may also consider purchasing a music service, such as Pandora for Business or Muzak. These service providers will have already obtained licenses for the music that they play in your business. Remember, however, that you will need to make separate licensing arrangements if you play music other than what the service provides.
Please feel free to contact any member of our Retail, Hotel & Restaurant team if you have questions about working with a PRO or contracting with a music service provider.