Music in the marketplace

Preface
This advisory is intended as a general explanation of the nature and functions of music performing rights organizations in the United States. It is designed to help businesses that use music in any way understand their rights and obligations under the copyright law. Information presented here is not intended to be legal advice and should not be considered a substitute for advice of counsel on specific copyright issues.

Public performance rights and Performing Rights Organizations (PRO)
Under U.S. copyright law, music creators and the owners of copyrighted musical works have the right to permit or prohibit the public performance of those works—the so-called “public performance right.” In order to effectively and efficiently protect and enforce their rights under copyright law, American composers, lyricists, and publishers usually join a performing rights organization (“PRO”). On behalf of their members or affiliates, the PROs issue what are called “blanket licenses” to music users, enabling them to lawfully perform any of the works of each PRO’s members or affiliates. The PROs collect license fees from their licensees and distribute the fees as royalties to their members or affiliates.

Foreign writers and publishers are also represented by PROs in their respective territories. Through reciprocal agreements with the U.S. PROs, performances of the works in the repertories of the foreign PROs are licensed in the U.S., and music created by U.S. citizens is licensed abroad. Under this system, composers, songwriters and publishers are relieved of the burden of monitoring performances of their music throughout the world. Moreover, those who wish to perform copyrighted works publicly need not negotiate licenses with each writer or publisher whose works they want to use.

Multiple organizations license performance rights for most music copyright owners in the United States.

Performance rights licenses
The performance rights that PROs obtain from their members are non-exclusive; individual composers and/or publishers may always negotiate separate license agreements directly with individuals or entities for public performances of their music. However, when faced with the prospect of expending time, effort, and money in trying to negotiate separate licenses directly with each composer or publisher whose music will be performed, most businesses that play music will choose to get a blanket license from one or more of the performing rights organizations.

A PRO blanket license permits the licensee to perform music in the performing rights organization’s repertory in a “nondramatic” manner. “Dramatic” performances—for example, full-length operas, ballets, musical plays, and popular songs performed as part of dramatic productions—require licenses obtained directly from the copyright owners of the music.  Also, if a choice is made to perform publicly only music that is in the public domain—that is, music that is no longer or never was protected by copyright—no license is necessary.

Why do I have to obtain public performance licenses?
The short answer to this question is: Because the law says you do. But some further explanation is needed as to why, for example, a merchant has to obtain a license and pay to play music using a radio or laptop computer in their store when playing music in the same manner at home or in one’s car is “free.”

The long answer starts with the U.S. Constitution, which gives Congress the power to grant patents and pass laws giving authors copyright protection for their creative works. Congress, in turn, has enacted copyright laws that grant copyright owners a number of exclusive rights, including the exclusive right to perform publicly or authorize public performances of their works.

Generally speaking, public performances are very broadly interpreted under the law and are defined as performing “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” Such places may include, but are not limited to, concert venues, bars, restaurants, nightclubs, hotels, shopping malls, retail stores, gyms, trade shows, conventions, dance studios, skating rinks, private clubs, venues operated by fraternal organizations, offices using “music on hold,” sports events, amusement parks, bowling establishments and cruise ships.  In addition, transmitting copyrighted music to the public—whether via traditional radio and television broadcasting or via cable, satellite or the internet—may also require a license.

The copyright law exempts from liability a limited list of public performances.

Given the broad scope of the protection given copyright owners, anyone whose business in one way or another performs music for its customers, patrons or members should be aware that they may be called upon by one or more of the PROs to license the performance of copyrighted works in their respective repertories. A business owner should consult with an attorney for answers to any questions about whether the music he or she plans to play publicly requires a license.

Do I need a license from every PRO?
Obtaining a license from one PRO does not protect a business from liability for unauthorized performances of songs in another PRO’s repertories. Accordingly, it is common practice for a business owner to obtain a license from each PRO. A business that performs a small number of musical works may be able to fulfill its licensing obligations with a license from one or two PROs or licenses obtained directly from the individual copyright owners. The PROs have free, searchable online databases that enable music users to determine who owns and/or represents a specific musical work. 

Who is responsible for the license?
Under U.S. copyright law, the owner of a business in which music is performed is liable for any unauthorized performances of copyrighted music. As a result, the business owner is initially responsible for obtaining a performance rights license. The business owner’s liability is based on his or her ability to supervise those who perform the music and because the owner derives financial benefit from those performances. Technically, everyone responsible for an infringing performance can be sued as an infringer, including a corporate owner, individual stockholders and officers, concert promoters, musicians and other independent contractors. Traditionally, however, PROs do not generally attempt to license performers (musicians or DJs, for example). Therefore, when copyright owners sue for copyright infringement, the defendants are the owners of the establishment where the infringing performances occurred, rather than anyone who actually gave the unauthorized performances.

If a business contracts for a jukebox or a service that, for a fee, “pipes in” music, either by providing tapes or transmissions to its subscribers’ premises through special equipment or the internet, the jukebox provider or music service is responsible for obtaining the appropriate licenses; unless the establishment itself charges for admission, in which case the owner of the establishment must obtain the licenses.

How are license fees determined?
Each PRO has standard fee schedules for different industries and classes of music users, from which individual businesses and other entities can determine their cost for an annual license. Generally, license fees are calculated using various metrics specific to a particular industry or class of music users, such as revenues, premises size, type of music use and rated occupancy.  For specific information on license fee rates, contact the PRO in question.  Note also that some PROs operate under federal antitrust consent decrees that require them to offer the same license fee rates and terms to similarly situated music users, ensuring that like businesses are treated in a nondiscriminatory manner.

Are there alternatives to getting multiple PRO licenses?
Yes. Business owners who wish to do so may negotiate separate licenses with the individual copyright owners—generally, music publishers—for each piece of music they want to use. Of course, this approach may be impractical for businesses that perform numerous musical works or that are unable to determine well in advance the specific works to be performed. 

Businesses can also avoid the need to obtain licenses if they limit the music to be performed to works in the public domain (where the copyright has expired or the works were never copyrighted). This alternative may also be impractical as most popular music is still protected by copyright, and new arrangements of classical music or traditional folk songs in the public domain may also be copyrighted. Public performances of copyrighted arrangements must also be licensed.

Another option often considered by businesses is licensing music from a music service. The PROs license music services so that the services’ subscribers do not also need licenses if the only music performed is provided by the music service. Note, however, that not all music services obtain PRO licenses that cover use in business establishments. Ordinary consumer services such as online podcast providers or video hosting platforms do not extend to commercial use by businesses. 

Yet another alternative for businesses and other entities that use music just for advertising messages and meetings is the use of music made available by music libraries.  A music library is a collection of copyrighted works owned or controlled by the music library company, just as any publisher owns or controls the copyrighted songs in its catalog. Most music libraries are affiliated with one or more of the PROs. It is a common misconception to think that using themes from a music library will avoid the performance rights issue. Unless a business owner has negotiated a separate public performance license with the library that owns the copyrights, they will still have to obtain a license from the PRO that represents the library.

What happens if I don’t get a license?
Failure to obtain a license to perform copyrighted music publicly generally results in liability for copyright infringement under U.S. copyright law. The infringer is subject to a civil suit in federal court. Sanctions against an infringer can include an injunction and costly “statutory damages” for each copyrighted song performed without a license, court costs, and attorney fees.

For more information
Anyone with questions about performing rights organizations, their license agreements, or rights and responsibilities under the U.S. Copyright Law should contact their attorney or the U.S. Copyright office.

U.S. COPYRIGHT OFFICE
877-476-0778
copyright.gov
Copyright and the music marketplace PDF