Following are some frequently asked questions regarding copyrighted music:
Q: If CDs are purchased in a retail store, can a club play them at events and activities?
A: Buying a CD doesn’t convey the legal right to play it in a business or public place. A club must get permission from songwriters or their performing rights organization (PRO) to play the music.
Q: If the club has a contract with XM Satellite and/or Sirius Radio, does it still need a music license?
A: Both Sirius and XM are licensed by PROs such as BMI. As long as XM and Sirius are used for background music ONLY, and the club’s contract with the music provider is a commercial account, then the music use may be covered. A business owner must purchase a license when a satellite radio unit under a consumer account is played in a business. Also, if the club charges admission, has dancing, and/or plays additional music such as CDs, DJs, live music, karaoke, etc., then the club must purchase a license.
Q: If a club plays music from a member’s iPod and/or a MP3 player, does the club need a music license?
A: Music played from iPods and/or MP3 Players is another form of recorded music. The club is responsible for obtaining a license when such recorded music is played by customers or employees.
Q: If I hire bands playing only original music do I need a music license?
A: Federal Courts have ruled that a business owner is responsible for all music performed in the establishment, regardless of instructions that may be given to performers about what they should play. Experience proves that many so-called “original” music performances include copyrighted songs.
Why Clubs Need a Music License
If you don’t understand why a club must pay to use music, you’re not alone. The need for music licensing often comes as a surprise to new entrepreneurs and even veteran business owners. Because we can buy a CD and play music as much as we want in our homes or cars, we sometimes like to think we can do the same in our businesses.
Songs—like computer software, books, poems, patented recipes, magazine articles, and other forms of intellectual property—belong to creators of the work until their copyright is transferred or expires. Although it is harder to touch with your finger, intellectual property is treated much like physical property under the law. If you own physical property, such as the building in which your business is housed, you control the usage, rental and sale of that real estate. You also help determine the price of that property when it is sold.
The concept behind music licensing is as old as the U.S. Constitution, which gives Congress the power to grant patents and copyrights. Just as the McDonald’s restaurant chain protects its brand names and “golden arches” trademark, songwriters defend their property from unauthorized use. Under U.S. Copyright Law, no other business can perform or play a copyrighted song publicly without the songwriter’s permission. In essence, each songwriter is a vendor to businesses, providing a specialized product—a unique musical work.
A songwriter, like other intellectual property owners, has the right to authorize the duplication of his or her work (such as CDs and tapes), distribution (in record stores, retail establishments, etc.) and sale of the product. In reality, the performer (singer and/or musicians) rather than the composer of the musical work makes the bulk of the income from those uses. Most of the composer’s income is derived from the public performance (live or recorded) of the music in businesses (radio stations, restaurants, etc.), which use his or her product to create ambiance through the performance of that music. The average songwriter earns less than $5,000 per year from performance royalties.
It would be very difficult for the writer of a popular song to negotiate a price and collect royalties from every business wanting to use the work, and conversely for the business owner to contact each and every songwriter whose music is used. In order to handle this process, performing rights organizations were established. BMI, a nonprofit organization that provides lawful access to a catalog of music (more than 6.5 million songs from more than 400,000 songwriters and copyright owners), allows businesses to receive a blanket music license with a single annual payment. All of the money BMI collects, after expenses, is paid out to songwriters and copyright owners—currently about 86 cents of every dollar. BMI is the primary source of income for composers who supply half the songs and musical works performed in America.
While some business owners may avoid paying music fees for a while, it can be an expensive game. The cost of using music without permission can be high. Under the U.S. Copyright Law, each musical composition which has been performed without authorization entitles copyright owners to damages of between $750 and $30,000, plus legal fees.
Jerry Bailey is senior director of media relations at BMI. You can reach him at 615-401-2825 or [email protected].