Special Coverage in Music Licensing
Retailers know that music is the not-so-secret ingredient that can enhance their store environment, give customers a more positive experience, invite them to explore, and help to show the products in their best most desirable light.
There can be a cost to play background music in your store, for licensing fees charged by performing rights organizations like BMI and ASCAP. You may have heard of retailers being contacted by these organizations and pressured to pay the fees. Or maybe that happened to your store!
However – if you know the magic formula – you can play music in your store, legally, without paying that annual fee.
Retailing Insight asked us to de-mystify this question, since we’ve been making music that’s sold in stores like yours for decades, and we’re happy to help. So here is our overview of how you can safely play music in your store, without risking obligation for license fees. We do need to say that we are not lawyers, and we are not offering legal advice. We are sharing our understanding of how this works, and what’s worked for us and many of our customers over the years. We’re also including a footnote with the text of the law, plus some articles that go into more depth if you’re interested in learning more about this. To be even more sure, you could ask for legal advice from your lawyer to confirm your choices.
Why Are There License Fees for Playing Background Music in Stores and Other Public Locations?
Music compositions and recordings are protected by copyright law. This is the key that allows musicians and composers to make a living. When copies of the music are sold, or used in a film or TV show, or performed in public, the owners of the copyrights earn a fee. Often this is a music publisher or record company and not the artists themselves, but those companies in turn must pay a part of those fees to the musicians and composers.
This is of course a general high-altitude view. There are countless ways the payments find their way through the complex system to the composers and musicians, and lots of companies and individuals take a piece of the action along the way.
The part of the story that applies to playing music in your store is called the Performance Right. When a song is performed in public, or in your store, or on the radio, and all sorts of other places, that’s a performance – use of the copyright – so it needs to be authorized by the copyright owner (usually a music publisher). Since the many ways, performances happen are so complicated, “Performing Rights Organizations” (like ASCAP, BMI, and others) formed to manage the collections of these fees. They keep a percentage and pay the rest to the music publishers, and the music publishers pay a share of that to the composers.
This Performance Right is part of a large and complex Federal law, many interconnected pages, US Code Title 17 – Copyrights. Since it’s an exclusive right, the copyright owner can assign to a third party (like those “Performing Rights Organizations”) the job of monitoring the performances and collecting the fees.
If a retailer or other business uses the music without permission (depending on the situation), that might be a “copyright infringement” and if it is, the owner of the copyright, or their agent, could use legal action to collect the fees.
But – that’s not the whole story!
What is the Formula to Play Music in Your Store without Paying the Fees?
Buried in deep within the huge maze of the Copyright Code is Section 110: Limitations on exclusive rights: Exemption of certain performances and displays.
And buried in that section is one paragraph that applies to retailers (the Code uses the term “vending establishment”).
The basic idea is that if the purpose of playing the music (the performance) is to sell the CD of that same music, then that is not an infringement of the copyright. That means it does not require a license fee.
For this to work, you can only play CDs of music that you are actually selling in the store (or a demo copy of a CD that you offer for sale). In other words, if a customer hears the music you are playing, they can buy that music CD from your store.
Also, play the music only in the area of the store that has the CDs for sale. That can be a large room, as long as the display of CDs for sale is in that same room. If the store has more than one room where music is playing, make sure that there is a for-sale display of music CDs in each room where the music is playing, or at least signage telling people where the music CDs can be found for purchase. Or you could have a small “playing now” display in each room with a note about where the CDs for sale are displayed. We believe the licensing agencies are not likely to contest this if it’s generally clear that the music is being played to sell the CDs. But if they do challenge you about it being in a different room, you might have to move your CD display, or ask your attorney.
Can You Play Music in Your Store or Other Business Establishment if You Do Not Sell Music CDs?
If you don’t sell music CDs, you could request permission from the music publisher (sometimes but not always that’s also the record company). If they gave you written authorization, that would be accepted by the Performing Rights Organizations, but you could only play music from the particular companies that gave you their permission.
The other way you can play music in your store without selling CDs is to play the radio. But this refers only to broadcast radio, not internet radio or streaming. If you want to play the radio, you should read the actual law, because there are strict limits of the number and placement of speakers that are too complicated to include here. That’s in the same section of the law as the footnote below, but it’s in paragraph (5) of that section.
Can You Play Music in Your Store from Streaming Services like Pandora or Spotify?
The simple answer is: no, unless you pay additional fees. Those services are licensed only for personal use. But there are services that are intended for business use, such as Pandora for Business, Soundtrack Your Brand, or SiriusXM Music for Business.
Use the magic formula: only play music from the CDs that you sell in your store, and display the CDs for sale in the same room where the music is playing.
Playing Music in Your Store: How to Avoid Paying for It! By Richard Stim, Attorney, Nolo Press
Music Licensing for the Uninitiated By David Grogan, American Booksellers Association
 17 U.S. Code § 110.Limitations on exclusive rights: Exemption of certain performances and displays
Notwithstanding the provisions of section 106, the following are not infringements of copyright:
… [ paragraphs (1) through (6) omitted]
(7) performance of a nondramatic musical work by a vending establishment open to the public at large without any direct or indirect admission charge, where the sole purpose of the performance is to promote the retail sale of copies or phonorecords of the work, or of the audiovisual or other devices utilized in such performance, and the performance is not transmitted beyond the place where the establishment is located and is within the immediate area where the sale is occurring. www.law.cornell.edu/uscode/text/17/110.