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Music Licensing: A Compliance Risk Often Overlooked By Business Owners

Posted by Dave on May 11th, 2018

As a small (or large!) business owner or manager you undoubtedly have myriad federal, state, and local regulations, taxes, fees, inspections, license, and compliance issues to deal with every day. Not the most fun part of running a business, is it?

There’s one licensing and compliance area that many business people overlook, and it’s potentially a big one: licensing the in-store music. Many businesses presume that because they pay for a subscription to consumer music services like Pandora, Spotify, Sirius/XM satellite radio, or use their own CDs, MP3s or even play vinyl records, that they don’t need to pay music license fees for the music they play in their establishment. This not true. With very few exceptions, any business (medical/dental office, restaurant, spa, hotel, grocery store, coffee shop, etc.) that plays music from any source that can be heard by customers must pay music-for-business license fees. It is infringing on copyright rules if the proper public performance licenses are not obtained.

What Businesses Need To Pay For Music Licensing?

Some businesses assume (wrongly) that they don’t need to get music performance licenses because they are so small. If you play music for customers or the general public, it doesn’t matter if your business is a single chair dentist office, a local grocer, a hair salon, a deli, or a 50,000 square foot big box retailer, if you play recorded music, you need to be licensed to stay legal.

The good news is that legitimate in-store music providers like Custom Channels can and do include all of the music licenses you need to play music in your business without fear of running afoul of copyright laws.

The reason legitimate music-for-business services like Custom Channels cost more than B2C services designed for individual listening, like Pandora or Spotify, is in part because of extra costs of the business public performance licenses. Royalties are paid to organizations like ASCAP, BMI and others. Businesses pay more than consumers because the music is being “performed” for more people – the dozens or hundreds of customers and employees that visit your place of business each day.

Music licensing has become a complex and fast-changing topic in the digital age. As CD sales have dropped dramatically, music creators (songwriters and performers) are increasingly looking to royalties from streaming and commercial uses of their songs to make a living. As such, the music licensing fees have been increasing every year along with new licensing agencies starting up to try to get a bigger piece of the music licensing pie for their artists.

For all its complexity, a big upside is that music-for-business streaming companies like Custom Channels have access to literally tens of millions of songs (virtually every song ever publicly released). We can use virtually any song to create an endless variety of customized streaming channels for our clients. Best of all, we include all of the public performance license fees your business needs to legally play our music streams in your business.

We Make It Cost Effective To License And Stream Music

It is possible to obtain all of the multiple music licenses yourself and play your own songs? Sure. But the costs of the multiple licenses and the hassle of paperwork, music reporting, and compliance will cost many times more than that of a typical business music subscription.

On the topic of cost, it’s always tempting to seek out the least expensive music provider for your business. But do your homework before signing on with a music-for-business provider that is advertising a cheap monthly price (i.e. under $20). Be sure they are including ALL music licenses with their service including: ASCAP, BMI, SESAC, GMR.

The reason it’s important to ask is that these licenses protect YOU, not the service provider. If a provider is cutting corners to save costs by not including all of the known licensing organizations, the service could be putting your business at risk. The best protection is to work only with companies that provide and pay ALL public performance licenses. Fines to a business owner for playing songs without the proper licenses can range from $750 to $30,000 or more per song, per performance!

No one loves paying and complying with federal, state, and local regulations, taxes, fees, inspections, and licenses, but it IS a part of business operations. With a legitimate music-for-business service like Custom Channels, you can rest assured your business will be compliant and legal and that the creators of the songs will be paid properly and continue to create great music for many years to come.

BONUS: Our streaming music services are legal and licensed to play in businesses that use SONOS sound systems!

We know the issues concerning music licensing for business can be complex and confusing. Got questions? Ask an expert – info@customchannels.net

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