Using "Private-use-only" MP3s and streamrips.
Nobody in their right mind would buy a DVD and open a cinema. The example is so "crazy-far-out-there," and we’ve been using it as a punchy one-liner for five years with literally zero arguments against it. But this is exactly how in-store music works. Literally. Let us explain:
A store decides to play music. They go to a B2B vendor that sells them a music subscription. But where does this vendor get the music? Not the licenses per se, but the actual, physical music files, the MP3s (or AIFF, Wave etc)?
Now, this may not be the biggest copyright infringement in history, but there is a huge side-effect with significant, negative consequences.
So assume you as a B2B DSP rip an MP3 and play this file in customer premises all over the world. Let’s ask a couple of questions. First, what label owns this track? When the track was bought from iTunes it didn’t come with any metadata such as the label owner. And if the track was ripped from SoundCloud, it didn’t come with any metadata, either.
Second, what publisher owns this track? Same as the label, the B2B DSP has no information about whose music is playing.
Third, in which country do these labels and publishers own this track? Even if iTunes says "Sony Music" on an MP3, that only means Sony owns this master file in that particular territory, but the same track may be owned or distributed by Warner in another country. When a B2B DSP streamrips or buys MP3s from iTunes and uses these master files across territories, it creates massive errors in reporting - if reporting is even done at all.
Which leads to the simple fact that without metadata it is literally impossible to pay the creatives correctly. Which leads to the big difference between consumer streaming services and in-store music providers.
B2C services built the technology to receive and publish 10 000 tracks per day. They have access to the production pipes of the world’s record labels.
B2B services, on the other hand, often rely on ingesting individual tracks one-by-one. These files come from iTunes or Streamrips. The net effect is that they do not know the ISRC codes or any other associated metadata of the music they're using.
With no publishing metadata attached to their physical files and publishers unable to provide a comprehensive works database of the content they control, there is no way for the in-store music provider to even know if they are licensed or not. Sure, they may have the PRO blanket in a territory, but what if a publisher has pulled back its Anglo American repertoire?
This could be copyright infringement on a massive scale and, worryingly, the DSP is not even attempting to find out.