What Types of Music Licenses Do Small Businesses Require?

Have you ever thought about the music that plays inside a restaurant or during an exercise class? Or perhaps music playing amid COVID-19 as people dine outdoors and exercise via virtual classes?

It’s easy to assume that all small businesses need to do is create a playlist on Spotify or turn on Pandora radio to blast music in their storefronts. However, creating this type of ambiance requires the business to first obtain a music license.

What Is a Music License?

Before we talk about music license for business, let’s explore the role of music as a copyright.

Music, whether it’s song lyrics or musical arrangements, is work considered to be part of performing arts. When music is initially composed, the creator may file for copyright registration to protect these works. Under the Copyright Law of the United States, the creator maintains exclusive rights to their music. They may decide if they would like to license this music to interested parties.

However, this is a decision made solely by the creator of the copyright. What would happen if a third party, or small business, attempted to use their music without permission? The unauthorized use would be considered copyright infringement.

What Are the Different Types of Music Licenses

Music licenses are essential for legally using music in various settings. Different licenses apply depending on how the music will be used, whether it’s for public performance, reproduction, or distribution. These licenses ensure that artists and rights holders are fairly compensated when their music is used in films, advertisements, live performances, or recordings. Below are some of the most common types of music licenses and their specific purposes.

Synchronization License

A synchronization license allows music to be used in visual media, such as films, TV shows, or commercials. This license covers the use of music in sync with video content.

Public Performance License

This license grants permission to publicly perform a musical work, whether in concerts, radio, or other live or broadcast settings. It’s required for playing music in public venues.

Mechanical License

A mechanical license allows for the reproduction of music, either digitally or physically, like creating CDs or streaming on platforms. This covers the recording and distribution of music.

Master Recording License

This license is needed when using a specific recording of a song. It is often required in addition to a synchronization license for visual media.

Print License

A print license gives permission to reproduce a musical composition in written form, such as sheet music. It is essential for distributing printed versions of music.

Blanket License

A blanket license allows the use of an entire catalog of music, typically provided by a performing rights organization (PRO). This is often used by venues or broadcasters needing regular access to a large music library.

Copyright Infringement Consequences

Let’s say you shared a video on YouTube of clients in your studio space dancing to Taylor Swift. The video goes viral, but the studio does not have the right to use this music for commercial purposes. You may start to receive letters from the American Society for Composers, Authors, and Publishers (ASCAP) stating that the public, live video is considered to be a performance. As such, the songs playing have been used for commercial gain. This infringes on the copyright. As a result of infringing on the work, the business may be forced to pay hefty fines — or possibly face a potential lawsuit.

Did the above paragraph scare you off from the idea of playing pop songs publicly again? Here’s the good news. Many musicians and artists do grant permission to let these copyrights appear in specific contexts. Let’s go back to the example that you run a dance studio where pop music plays in the background while clients exercise to the beat. Or, perhaps you livestream exercise classes to pop songs. You can purchase a music license and pay a fee to play this music.

Performance and Non-Performance Licenses: What’s the Difference?

Before you begin playing music in your startup’s space, you need to remain in compliance with copyright statutes.

First, you must determine if the music licenses you’ll require are performance or non-performance licenses. Recorded music that is played publicly or for commercial gain is considered to be a public performance. This is applicable to spaces like gyms and exercise studios. Non-performance music is typically music that plays for background purposes to set a certain type of ambiance. This kind of music may play inside commercial establishments like hotels or in outdoor shopping promenades.

If you know you’ll be playing recorded music because your business relies on this kind of music, you’ll need to obtain a public performance license. This allows you to use music in spaces where it is essential, like exercise and workout classes, and earn a profit on the performance. Filling out a licensing form and paying a fee for a public performance music license also compensates the original artists for their copyrighted works.

Where Can You Obtain Music Licenses?

A public performance license is issued by performing rights organizations (PROs). Let’s take a look at the three biggest organizations in the United States.

1. American Society of Composers, Authors and Publishers (ASCAP)

If you’re looking to play a particular song, the chances are pretty likely that ASCAP has the rights to it. The American Society of Composers, Authors and Publishers (ASCAP) owns more than 8 million songs and represents over 140,000 musicians around the world. Filing for a public performance license from ASCAP and paying the organization directly gives you permission to play all ASCAP music. You may use it for public performance and earn a profit off those performances for commercial gain.

2. Broadcast Music, Inc. (BMI)

Broadcast Music, Inc. (BMI) is another major music rights organization. BMI represents more than 1 million artists and over 15 million songs. The organization also provides music licenses for non-performance music in addition to spaces that play performance music.

3. Society of European Stage Authors and Composers (SESAC)

The Society of European Stage Authors and Composers (SESAC) is the largest European music rights organizations. SESAC owns more than 1 million songs and represents over 30,000 European artists. SESAC also represents European artists in North America.

Do you need all of these music licenses or will having just one be sufficient for your business? The best practice in the United States is to obtain music licenses from both ASCAP and BMI. This allows you to receive a blanket license. You, the business owner, now have permission to use all of the copyrighted music from these organizations as long as you are able to pay the yearly licensing fees and renewal fees in a timely manner.

Be mindful, however, that if your business is currently offering classes online or livestreaming through social media you will need to obtain a separate sync license. This gives you permission to use songs that have copyrights online for commercial gain. Check in with BMI and ASCAP to determine the proper filing forms to fill out for a separate sync license.

How Much are Music Licenses?

Fees for music licenses will vary depending on the type of licenses you obtain, since pricing for ASCAP varies from that of BMI.

Another factor to take into consideration is the size of the space in which your business is run and its number of clients. A large establishment with a particularly high number of members will need to pay a bit more money than a smaller studio with a select clientele as part of its overhead expenses.

How Quickly Should You Obtain Music Licenses?

Obtaining a music license should be treated in the same manner as obtaining basic business licenses. The best time to file the paperwork for applications is before you open up the space in wish you plan to play music for performance purposes.

Royalty-Free Music: Which Options are Available?

Amid COVID-19, many businesses are pivoting their business models and offerings to meet customer needs. They are also looking to save a bit of money where they can. Is it possible that a small business can forgo paying for these licenses and utilize royalty-free music instead?

The answer is yes, although it may require you to think outside the box a bit.

You may play music that is part of public domain. This includes sheet compositions and sound recordings that have been created in 1923 or earlier.  

Additionally, you may consider searching for royalty-free music through apps like iTunes and Spotify. Or, you may subscribe to a membership website like Artlist that provides royalty-free music when making videos.

Some spaces, like restaurants and ballet studios, may even offer to pay local musicians to perform original music in their establishments. This provides a win-win for everyone. It gives aspiring musicians a chance for a new audience to see and hear their music. In turn, clients and customers receive the chance to listen to original new music.  

Do you need a music license, or have questions about obtaining a basic business license? Let our team of professionals help you out! Visit mycorporation.com to learn about essential business licenses.