When music is played in a business, the business owners are required to pay copyright royalties on the songs. By using most credible music services, like Custom Channels, Muzak, Mood Media, or RockBot, music licensing is included in the monthly fee along with managing and delivering the music mix.

It IS possible to create your own music mix from your ipod or CDs and license the music yourself. While most people are too busy running their business to manage the playlists AND keep track of music licensing, it can actually be done by licensing through Performing Rights Organizations, which includes ASCAP. However, a business must obtain a license from each of the many organizations such as ASCAP, BMI, SESAC, etc.

How ASCAP Assessed With One Business

The music licensing firm ASCAP contacted a restaurant that was playing in-store music to inform them: “Attached, please find licensing documentation for ASCAP and more background on why licensing for background music is so critical.” The 6-page form included a bill for $390.

Here’s how ASCAP arrived at that amount. By using a page of questions, kind of like an IRS 1040 tax form, ASCAP allows a business to determine how much is owed for playing ASCAP licensed music.

  • Does the restaurant have live music performances? No.
  • Are TVs and radios being used? No.
  • Is admission being charged? No.
  • There were several other “no” questions, we won’t list them all. But if the answer is “yes” to any question, it changes the licensing fees.
  • Does the restaurant use recorded music? Yes! That’s a charge of $3.65. It would be $2.42 if live music was “yes.”
  • What’s the total premises occupancy? You’ve seen the signs, often put up by fire departments, to show that no more than X number of people should be inside. This restaurant’s occupancy total was 50.

Instructions are to take the occupancy (50) times $3.65, which equals $182.50. However, ASCAP has a minimum fee of $390. Pay whichever is greater.

So that’s what this restaurant owes in order to play songs by ASCAP songwriters for one year. The restaurant would still have to do the work to create and update playlists and get the music mix just right in addition to paying $390.

This Isn’t One-Stop Licensing, Many Licenses Are Required

Wait, there’s another issue. Not all songs are licensed through ASCAP. The other music licensing agencies in the USA are BMI, SESAC, and GMR. So for $390 a year this restaurant could only play ASCAP licensed songs, not just any song. In order to legally play any song that’s commercially available, three licenses would be needed.

Let’s assume BMI, GMR, and SEASAC use the ASCAP formula. It would cost $1,560 to play any and all music in this restaurant, and that’s just for the music licensing. Someone still has buy the individual songs, create the playlists regularly, and make sure it all sounds good.

So while a business can self-license music for in-store play, it can be costly and time-consuming.

A Happy Ending to Music Licensing

The kicker to this story is that this restaurant is a client of Custom Channels so they’re legal and paying a low monthly rate. We handle ALL the music licensing along with streaming music directly to their restaurant in high-quality audio. We have all the songs they want, we mix it together differently each day, and we update the playlist often. And it’s far less than $1,500 a year for one location. So the restaurant likely replied to the ASCAP email “we’ve got it covered with Custom Channels!”

Read more about music licensing here!

If you’d like to contact us with questions about music licensing or providing music service for your business, use our Custom Channels contact page.