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Music Licensing for Bars and Restaurants: What You Need to Know
Playing recorded or live music in your bar or restaurant requires that you be fully conversant with possible licensing restrictions in order to avoid potentially expensive lawsuits from music licensing organizations.
Let's go into more detail on what these organizations are and what you need to be aware of in order to make the best decision.
Why The Music You Play in Your Establishment Needs to Be Licensed
Unfortunately for the bar or restaurant owner, if you neglect to properly research the laws that pertain to playing music in your customer space, and just turn a device on and play what you want, you open your business to legal clams by music rights holders such as ASCAP, BMI, and SESAC that could be very costly if your are sued.
You may have heard of recent enforcement by ASCAP, BMI, and SESAC where they send their representatives around to bars and restaurants posing as customers and stay for up to several hours and make notes on what songs you have played in your establishment, either live or recorded.
They then check up on your music licensing to see if you are using a music service that already pays them licensing royalties, or if you are licensing the music direct from them.
Establishments that do not have an existing licensing agreement in place are billed at a minimum of $750 per song played. This often results in a demand for several thousand dollars to be paid or face a legal challenge. You do not want to be in the situation!
Many bar and restaurant owners view this as a pure money grab or shakedown by these organizations. Afterall, these music rights organizations have no idea exactly what songs you are playing, so how can they correctly pay the right artists any music royalty earned?
ASCAP, BMI, and SESAC claim that the royalty fees they collect for use of their music is then distributed to the songwriters and artists appropriately, but this can be refuted or challenged by many an artist.
Regardless of what is right or wrong, the law as currently written is on the side of the owner of the music license and leaves little wiggle room for the bar and restaurant owner.
What's important for you is how to limit any financial risk due to potentially playing unlicensed music and what steps you can take to make sure you are not subject to any potential demands for collection.
What are ASCAP, BMI, and SESAC?
ASACAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music International) and SESAC (Society of European Stage Authors and Composers) are the three largest performing rights organizations (PROs) that are charged with collecting royalties for songwriters and publishers for "public performances" of songs in their respective catalogs.
Songwriters and publishers sign up with these societies and are rely on them to collect any appropriate royalty if one of their songs is played in a public venue.
Performing Rights Organizations
PROs determine annual licensing fees by a variety of factors:
- single unit versus multi unit operation
- square footage of the establishment
- customer capacity of the establishment
- number of nights music is played
- whether music played is recorded or live
- whether a cover charge is collected
- and other factors
Be aware that when you have a license from one PRO, it only covers music represented by that organization. You need to be licensed by all three performance rights organizations.
There are many instances of bar and restaurant owners who pay a license to one PRO being harassed by another PRO because they failed to obtain licenses from all three PROs.
To obtain full details for each licensing organization, use the following links:
more BMI details
What Does All This Cost?
Your annual cost will vary based on the following factors: single unit versus multi unit operation, square footage, capacity of business, number of nights music is played, whether music is recorded or live, audio only or audio and video combines, whether a cover charge is collected, and other factors.
Typically bars that do not play live music pay anywhere from $500 to $1500 to each PRO annually. Bars that have live music will have a higher licensing fee.
Going to each PRO website and running the numbers based on that particular PRO will allow you to determine the cost.
Many state restaurant or beverage associations have a 5% discount for signing up through them, so if you are a member take advantage of this discount when and if you obtain PRO licenses.
Exemption For the Use of Radio and TV Music
It is important to note that there is an exemption for needing a license in a public venue. In the US, under the Fairness in Music Licensing Act of 1998, businesses of a certain size (bars and restaurants under 3,750 square feet, stores under 2,000 square feet) are exempt from the paying licensing fees to songwriters, composers, and music publishers under the following three conditions:
- The exception only covers music played from a radio or TV (not music played from a CD, MP3, or iPOD)
- There must be less than 4 loudspeakers or TVs in any one room and less than 6 loudspeakers or TVs total.
- customers are not charged a direct fee to watch TV or hear the music (ie: cover charge)
Businesses whose square footage exceeds the above square footage indicated may qualify for an exemption on paying royalties for playing music from a radio or TV if they use six or fewer speakers with no more than four speakers in any one room or use audio visual equipment consisting of no more than four TVs, with no more than one TV in each room, and no TV having a diagonal screen size greater than 55 inches, together with the same speaker restrictions.
Please note: this article is NOT offering legal advice and should not be taken as such. You are advised to do your own due diligence when making a decision about whether or not you need a licensed music service.
See this link for more details on this exemption.
Because these exemptions apply only to TV, radio, satellite and cable, any establishment that plays CDs, tapes, records, iTunes, iPods, MP3 players as well as LIVE music (if not original music) are still required to obtain licenses from the performing rights organizations (PROs).
Frequently Asked Questions about Music Licensing
Why is a music license necessary?
Unless you fall under the exemption discussed earlier in this article, you cannot publicly play music that is licensed by another person or organization. Copyright laws require music users to obtain permission from songwriters and composers who can charge a fee before their music is played publicly.
If I hire musicians to play live music, aren't they responsible for any public performance fees?
No. Since your business is benefiting from the performance of music, by law management is held responsible to ensure that music played is properly licensed.
You are liable if your musicians play a cover song that you have not paid a license to use. If your musicians play all original material, a license is not needed. However, if they slip a cover song in then you are liable for having a license for that song.
If a business has a license with another performing rights organization, do you need a license with the other two PROs?
Yes, you do. A music license only allows you to perform copyrighted music that is licensed to that particular organization.
There are many instances where a bar or restaurant has been sent demand letters from one PRO even though they hold a license with the other PRO. To protect yourself, you need to be licensed with ASCAP, BMI, and SESAC at the same time.
Since I bought the music that is on my iPOD or bought a CD, do I still need a PRO license?
Yes, you do. What you have bought is the file to play for private listening use. When you play this music in public, you need to obtain PRO licenses.
What happens if I play music that I have not obtained a license for?
U.S. law allows the PRO to sue you for payment at the rate of $750 per song infringed upon plus attorney's fees and court costs.
A quick search of the internet shows how prevalent these lawsuits are. The PROs hire individuals to spend time in your establishment and document when a particular song they control the rights to is played. If you do not have a license to use this music, you can expect the wheels to begin turning as they attempt to collect.
I have heard of some bars and restaurants receiving demand letters for payment even though they have not played any licensed music. Is this in fact true?
Yes. It does happen where the PROs hire incompetent or lazy or worse employees who will try to shake you down for playing music that they claim is in violation of their licensing rights.
If this happens, you should consult with your attorney immediately. Do not ignore the demand or hope it will go away - they will ratchet up the pressure and continue to come after you.
If you have a coin operated jukebox operated by your customers, you can purchase a single license from the Jukebox License Office (JLO) instead of purchasing multiple licenses. A JLO license gives licensee rights under each ASCAP, BMI, and SESAC repertoires.
Most jukebox vendors include music licensing in the lease price. Make sure you verify this is the case.
To learn more, go to:
Juke Box License
So How Can I Legally Play Music in my Bar or Restaurant?
You need music to create the ambiance in your bar or restaurant. It simply is a better experience for your customers when you have music playing. So what are your choices?
Buy a License From Each PRO
You can buy a PRO license from all three organizations (ASCAP, BMI, SESAC) that depending on the factors laid out above and whether you play recorded or live music will cost you $1500 to close to $10,000 per year.
Some bars and restaurants want total control on what is being played and obtain PRO licenses annually and play music from their iPOD, MO3 player, or CDs. Others that have use live music as part of their entertainment understand the need for PRO licenses and shell out accordingly.
Live Music - Hold a Fundraising Night
If your bar plays live music, you may want to hold an annual "Save the Live Music" night where you get bands to play for free while you raise money through a cover charge to fund your live music PRO fees.
Your live musicians are very aware of the shrinking number of bars that they can play in and understand why you need to do this. The last thing they want is to have fewer venues where they can perform. Be sure to indicate that the costs of PRO rights for live music is very high and if everyone pitches in you can keep it going for another year.
If you use music primarily as background music, you can sign up to a music service that included the performing rights licensing fees for ASCAP, BMI and SESAC in the monthly service cost.
This is the simplest and most straightforward way to limit your liability, and you still get a quality offering for your customers.
There are several licensed music services you can choose from, with initial equipment and setup fees around $120 and then around $25 to $30 per month once set up.
You DO NOT want the consumer versions - you specifically need the business version, as it includes the performing rights organization fees.
BarBusinessOwner.com has contacted both SiriusXM For Business and DMX/Pandora For Business for preferred pricing for our members.
DMX/Pandora did not come through with any additional discounts, while SiriusXM For Business did and is making available to all bar, restaurant, or other types of businesses who sign up through this link the same national preferred pricing that the multi-unit restaurants and mega-retail stores receive.
We have heard positive feedback from members who use both services, so which one you choose is up to you.
Most importantly, our recommendation is to make this a priority and get your music licensed asap before you receive a demand letter from a PRO demanding several hundred to several thousand dollars.