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Want to Play Music Legally at Your Small Business? Read This First

How to Legally Play Music in Your Business

If you play music at your small business, the review of ASCAP and BMI Consent Decrees [1] by the Department of Justice Antitrust Division (DOJ) will likely have some consequences.

The DOJ is reviewing two music antitrust consent decrees which have been around since the 1940s. And with this review, the way how music is played live, broadcasted and streamed could change.

If the changes go through, it will eventually mean higher/more fees for businesses that play music in their establishment. But it also applies to online companies, movie companies and commercials.

The Review

The review comes as the music industry is seeing many new changes to the way people and organizations consume content. Streaming services such as Spotify and Pandora are two examples of how they have changed the industry.

Makan Delrahim, Assistant Attorney General for the Antitrust Division, addressed the issue of these changes in a press release for the review.

Delrahim said [2],  “There have been many changes in the music industry during this time, and the needs of music creators and music users have continued to evolve.  It is important for the Division to reassess periodically whether these decrees continue to serve the American consumer and whether they should be changed to achieve greater efficiency and enhance competition in light of innovations in the industry.”

The DOJ has been taking comments [1] on the antitrust consent decree review until August 9, 2019. The consent decrees may be scrapped, changed or stay as they are.

Representing the industry, ASCAP Chief Executive Officer Elizabeth Matthews, said [3], “A more flexible framework with less government regulation will allow us to compete in a free market, which we believe is the best way for our music creators to be rewarded for the value of their music.  A free market would level the playing field, encourage competition and allow us to innovate on behalf of music creators and licensees alike, while ensuring fair compensation for songwriters.”

The Consent Decrees

Based on the consent decrees of 1941, ASCAP and BMI can only distribute blanket licenses covering all of their catalogs. This means they can’t charge different fees for compositions which are not the same.

Furthermore, the decrees also state the blanket license fee has to be reasonable. If there is a dispute in the fees, it is settled in the Southern District of New York by a judge.

Why use a consent decree? When an industry enters into a consent decree with the government, it mitigates regulatory fear over possible or actual market abuses. And just like a litigated decree, it binds the government and consenting defendants to the terms of the decree.

The Performing Rights Organizations (PROs) abide by these decrees and protect the interests of the creators.

The PROs

The PROs represent the music industry. They are: Broadcast Music Inc. (BMI); the American Society of Composers, Authors and Publishers (ASCAP); Society of European Stage Authors and Composers (SESAC); Global Music Rights (GMR).

These PROs protect the intellectual property of creators by acting as intermediaries between restaurants and songwriters. Their goal is to make licensing less complicated and convenient for business as well as cost-effective.

According to the two consent decrees entered by the DOJ in 1941 with ASCAP and BMI, it requires them to license the public performance rights at a reasonable rate. Considering ASCAP and BMI control close to 90% of the market, any changes will basically affect the industry as a whole.

How to Legally Play Music in Your Business

Music plays an important role in setting the mood [4] for many small businesses. This is especially true for those in the hospitality industry. Whether the music is live, on radio, TV and now streaming, you have to be aware of your liabilities.

Without proper licensing, your business could face some serious legal issue for copyright infringement. And depending on the judgement, the fine can be very costly.

There are many rules, so make sure you are aware of them before you start playing music. Here are the exemptions for playing radio and TV.

If you don’t charge to hear the music, Federal copyright law, Section 110 (5)(B), exempts restaurants that play music transmitted via radio, TV and cable and satellite sources. If the music comes from live bands or CDs, it is not exempt.

Another exemption is the size of your establishment. If it is smaller than 3,750 gross square feet and it doesn’t have more than four TVs it is exempt. Any food service or drinking establishment 3,750 square feet or larger, must secure public performance rights for TVs or radios.

There are conditions to these rules so make sure to find out what they are if they apply to you.

If you don’t want to pay a licensing fee, you can always play royalty-free [5] music or music which is in the public domain. You can find this type of music at Pdinfo.com [6].

The problem for small businesses is most owners are not aware of their liabilities. If you plan on playing music or are already playing music without paying a licensing fee, take a look at the National Restaurant Association’s (NRA) site.

An article titled, “11 Questions about music licensing [7]” is a good primer for some of the basics about licensing.

Image: Depositphotos.com