Pulling Back the Curtain on Music Licensing Issues

Image Source: BMI

Is there music playing in your bar or nightclub? Unless you’re operating a very specific concept, we’re willing to bet you’ve answered yes. Assuming that you answered to the affirmative, do you understand music licensing, copyrights, commercial music services (CMS), and performance rights organizations (PROs)? BMI’s vice president of licensing, industry relations, Dan Spears, presented an education session in Las Vegas during the 31st Annual Nightclub & Bar Convention and Trade Show that explained the ins and outs of music licensing.

So, what is a copyright? It’s a form of intellectual property protection for creators of “original works of authorship,” which includes literary, dramatic, artistic, and musical works. This protection, Title 17 of the US Code, also extends to certain other intellectual works but we’re concerned with music. Intellectual property, just like physical property, cannot be used without the permission from – and a payment made to – the owner. They last until 70 years after the death of the owner and then the work may no longer require a license for use because it will become “public domain.” Of course, we’re not talking about public domain, we’re talking about how to keep from infringing upon copyrights and avoiding legal problems.

There are several types of copyrights that protect music: mechanical, synchronization, master use, digital performance right in sound recording, and public performance. It’s the latter that pertains to music playing in bars and nightclubs. Have you ever actually read the reserved rights notice that plays on a DVD before a movie starts? Do you remember the line about private use and how playing the movie for a public audience is prohibited? That same restriction applies to CDs, MP3s, and other digital audio files. Music copyright holders have granted permission for people to listen to the works, or play them privately, such as in their home or vehicle.

To perform publicly means to perform at a place open to the public, or at any place where a substantial number of people outside of a normal family circle and its social acquaintances is gathered. It also means transmitting or communicating a performance in such a place through any device or process. Live entertainment and recorded music fall under the umbrella of public performance, and CDs, MP3s, DJs, karaoke, other digital audio files, free-pay jukeboxes, television, radio, and DVDs fall under recorded music.

Bar and nightclub owners and operators basically have two options for playing copyrighted musical works in their establishments. One option is to secure a license with the PROs whose music they choose to perform in their establishment. A PRO license authorizes copyrighted music to be performed via a variety of sources, including a live band, recorded music sources, a DJ, and karaoke, among others, giving a business the flexibility to perform the music that they choose in the manner in which they choose. Another way is  to contract with a commercial music service (“CMS”) which has secured the necessary permission from the PROs to authorize the CMS customers to publicly perform the pre-selected copyrighted works included in their offering as ambient background music in their establishment. I note, however, that if a CMS customer plans to use music in any other manner in the establishment, including performances by a live band, recorded sources, a DJ, karaoke, or otherwise, the business will also need to secure a PRO license. That is because the CMS agreement only authorizes performances of recorded background music transmitted via the CMS service.

The other option is a PRO like Broadcast Music Inc. (BMI), America Society of Composers, Authors and Publishers (ASCAP), Society of European Stage Authors and Composers (SESAC), and the newly formed Global Music Rights (GMR). When it comes to the music playing in your bar or nightclub, it’s most likely represented by BMI or ASCAP. In comparison, SESAC and GMR represent high profile artists but have smaller portfolios. Make no mistake, however – SESAC and GMR will defend their copyrights aggressively. The benefits of PROs over CMS are time and money; both will be saved by bars and nightclubs. A blanket license means:

  • A business can play any or all of the songs in a PRO’s repertoire.
  • The venue owner doesn’t have to spend time contacting each publisher or songwriter for permission to play their music publicly.

As their VP of licensing, industry relations, Dan was able to speak to BMI’s PRO benefits specifically, which are:

  • Simplicity of use, as their license fees are based on frequency of music use and the occupancy of an establishment.
  • Access to all of the works in BMI’s catalogue.
  • Protection from copyright infringement penalties.

You’ll have to decide whether CMS or PRO is best for you, and which catalogue or catalogues you’ll want to access. The important things to keep in mind are licensing fees and keeping out of harm’s way legally.

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