Restaurant Music Licensing - Everything You Need to Know

Music License for Restaurants: Everything You Need to Know

Music has the power to shape the perfect dining environment. It adds the ambiance needed to enhance the customer experience. But did you know that when restaurants simply plug in a Spotify playlist, or any other personal music streaming service including Apple Music, YouTube, Pandora, SiriusXM, iTunes, Amazon Music or Tidal, they may violate copyright laws?

It might seem insignificant, but ignoring the proper music licenses can be costly for restaurants and other businesses.

For example, Meadowlark Bar in Denver was sued for $27,000 for playing copyrighted hits after they stopped paying the licensing fees.

Additionally, The Blue Moose Bar & Grill in Topeka is being hit with a lawsuit seeking damages over unlicensed use of just two of the songs they play, “Hit Me With Your Best Shot” and “Play That Funky Music.”

Well, even after the suit is settled, Blue Moose won’t be playing that funky music ever again, as the lawsuit includes a permanent ban for tracks owned by the organization that holds the rights – as well as a requirement to pay the organization’s legal fees.

Big companies as well as small business owners can be targeted for lawsuits if they don’t comply with copyright law. For this reason, it’s essential to secure the proper music licenses for restaurants.

Here’s the good news: leveraging a music service that handles licenses for music streaming for your business makes it easier and less expensive to set the mood, all while being compliant and eliminating the risk of fines.

In this article, we’ll explore the essentials of restaurant music licensing and why compliance is important, yet easy, when bundled into a single custom music streaming for business solution.

Posted on September 28, 2023

Restaurant Music Licensing Law Explained

The soundscape is integral to the dining experience. It sets the tone, creates an atmosphere, and softens the clinking of silver or glasses with cheerful melodies. But playing overhead and background music in a commercial setting like a restaurant requires proper licensing.

In the U.S., copyright infringement is a federal crime, and violating music licensing laws can be penalized with hefty fines ranging from $750 to $30,000 per infraction, although penalties for “willful” infringement can climb to $150,000.

It’s a common misconception that playing music from your personal digital library or streaming account does not require a music license for restaurants. In reality, consumer music streaming services like Spotify, Apple Music, YouTube, Amazon Music, Tidal, and Pandora are designed for personal, non-commercial use. Their terms of service explicitly state that these services can’t be used publicly or in a business setting.

If you misuse these services for commercial purposes, you may be engaging in copyright infringement – which could make you liable for fines.

Searching through the terms of service for various streaming platforms, and navigating the complex intellectual property landscape, is time-consuming and mistakes can expose a restaurant to legal risks.

To avoid risks, a service like Soundtrack Your Brand will provide legal, compliant, hassle-free music streaming for restaurants – allowing you to save time and money!

Two Copyrights Within Each Recording

In music licensing laws, every recording comprises two copyrighted works: the underlying musical composition (musical work) and the actual recording (sound recording).

The songwriter (or the writer’s music publisher) usually owns the copyright for the musical work. The recording artist (or the artist’s record label), usually owns the copyright for the sound recording.

Proper licensing ensures that these creators and music rights holders are properly compensated for their work, just as you would pay an employee for their contribution to your business.

It’s worth noting that separate licenses are needed for a venue to play live music or include a cover charge.

Licenses Required to Play and Stream Music in Your Restaurant

The Copyright Act of 1976 remains the primary basis of United States copyright law, protecting original works of authorship including musical, dramatic, literary, and other artistic works that fall under the umbrella of intellectual property.

Generally, businesses need labels, publishers, and performing rights organization (PRO) licenses to play background music in their restaurant.

Please review these links for music licensing in the United States and internationally.

A public performance license allows you to play a song in a public environment, whether it’s played from a jukebox, over a speaker system, from a TV, or even through a karaoke machine. This license is usually obtained from the PRO or PROs representing the licensees.

There are four PROs in the U.S. that manage, collect, and distribute public performance royalties:

In Canada, the performing rights society is SOCAN. Here’s a link for full details on Canadian music licensing for music in your restaurant.

A music service like Soundtrack Your Brand can handle the complexities of music licensing to help ensure your restaurant is compliant and protected from lawsuits.

Most often, subscribing to a streaming  music service for business is less expensive than securing licenses directly from each individual PRO.

For example, with Soundtrack Your Brand, a restaurant or coffee shop larger than 2500 square feet can access, customize, and play from a fully licensed catalog of over 100 million songs for just $420 to $582 per year – versus $1400 to $1900 in fees alone to acquire a license directly from the PRO.

Do I need a separate license to play live music in my restaurant?

If a restaurant hosts live performances, such as bands or DJs who play copyrighted music including covers, the restaurant owner will only need a separate or additional live music license from PROs.

Restaurants and bars are liable if musicians play a cover song that you have not paid a license to use.

If a live band or musician only plays all-original material, a license may not be needed.

Unfortunately, PROs often don’t mention that you need to be licensed with ASCAP, BMI, GMR, and SESAC at the same time. There have been many instances where a bar or restaurant received demand letters from one PRO even though they hold a license with another PRO.

Common Mistakes That Expose Restaurant Owners to Lawsuits

Obtaining a blanket license from one PRO, such as ASCAP, gives you permission to play music from numerous artists and copyright holders under a single legal agreement. However, most popular songs will be only partially licensed to a single PRO, so you’ll be limited to playing music ONLY from songwriters in their catalog.

For example, if you want to play music by Gwen Stefani, a blanket license from GMR would at least partially cover many of her hits:

Screenshot showing breakdown of the percentage of writers covered by a GMR license for Gwen Stefani's music.

Image Source

As you can see, GMR represents 100% of the writers of “Hollaback Girl.” You could play that song with a blanket license from GMR only and have no reason to worry about a lawsuit. But if you want to to play her other songs, you’ll need additional licenses.

For example, GMR represents only 50% of the writers of “What Ya Waiting For.”

Screenshot showing breakdown of writer and society representation for 'What Ya Waiting For'.

Image Source

That song was co-written by a writer represented by BMI. This is pervasive in the music industry.

No matter who your favorite artist is, it’s highly unlikely that a blanket license from one PRO would cover all of their greatest hits, because there are almost certainly co-writers that belong to BMI or another PRO instead.

This means that if you purchase a blanket license from only one PRO, you will need to research which songs are fully covered by that PRO and play those songs exclusively. If partial rights are owned by ASCAP, for example, you will need a license from that PRO as well to be in full compliance.

Here are the databases for BMI, ASCAP, SESAC, and GMR.

Another option that will help you save money (up to 90% in some cases!), eliminate risk, and ensure you’re only playing fully licensed tracks is to sign up for a service like Soundtrack Your Brand that offers music streaming for restaurants.

These services bundle all of the required licenses together to simplify the buying process. So instead of dealing with three or four organizations, you deal with one.

Streaming licensed music recordings requires a license for both the sound recording and the underlying musical work or publishing. This means you must pay for the sound recording, publishing, and the public performance license holders (PRO) or collective management organization (CMO), depending on the country you're in, separately.

You may also need to renew your licenses annually when paying separate licensees.

Remember, if you’re paying PROs directly in the U.S. and Canada, keep a record of the license agreement and the music you are playing in the event they ever audit you.

Songwriters and publishers sign with PROs and rely on them to collect any applicable royalties when one of their songs is played in a public venue. When a composition is publicly performed, the music rights holders must be paid. If you’re playing a PRO’s catalog without a license, they can and will pursue legal action. 

Soundtrack Your Brand covers all three licenses in the U.S. and Canada, and the first two licenses in the other 70 countries where we provide licenses for business use.

However, the public performance licenses are obtained through local performing rights or collective management organizations. Here’s a list of PROs and CMOs by country.

The Cost of Music Licensing (and Noncompliance)

While playing a carefully curated playlist is one the most cost-effective ways to differentiate your brand, music licenses for restaurants are a necessary expense if business owners play music for their guests.

These fees are typically based on factors such as:

  • Your type of business.

  • Square footage and/or capacity of the venue.

  • Whether the music is live or recorded.

  • Frequency of the use of the music.

The cost of a music license can range from a few hundred to several thousand dollars per year, depending on the specific circumstances of the restaurant.

Although music licensing fees may seem like an unnecessary additional cost for restaurant owners, non-compliance and playing unlicensed music poses a significant financial risk. Refusing to pay a licensing fee or ignoring communication from PROs can land you on the losing side of a fine or a lawsuit, and the costs could shutter a business. 

For example, a Raleigh, North Carolina, restaurant owner was ordered to pay more than $40,000 in fines and legal fees to BMI for illegally playing music in their establishment. The restaurant folded shortly thereafter.

Another PRO, ASCAP, warns small businesses that ignore the copyrights of its member artists: “In past cases, several venues that could have paid ASCAP a very reasonable and affordable license fee ended up paying far more in damages in accordance with the law. It’s not a surprise that judges would decide in favor of ASCAP songwriters in these cases given Federal copyright law.”

Common Questions About Restaurant Music Licensing

If you have a question that we don’t answer here, please contact us.

Can I avoid paying PROs by licensing music directly with the songwriters and publishers?

It is possible to bypass PROs and license music directly from the copyright holders. Some businesses want to do this to support local unsigned artists. However, this can be a tricky and time-consuming process, and you should speak to a music attorney before attempting this.

Can I legally play music from a radio station or TV?

In some cases, yes. But this gets complicated. There are exceptions in the Copyright Act that allow this, as long as the restaurant or business doesn’t charge customers to hear the music and is of a certain size.

A restaurant or bar must be less than 3,750 square feet in size. If the restaurant is larger, and fulfills one of the following criteria, it must secure a license to play the music.

If the music is played over a TV:

  • There must be no more than four TVs in the restaurant, and no more than one per room.

  • None of the TVs can be larger than 55 inches diagonally.

  • The audio cannot be connected to more than six loudspeakers, there can’t be more than four loudspeakers per room or in any outdoor space, like a beer garden or patio.

  • The music must not be transmitted further than the physical limits of the restaurant property.

If the music is played over the radio:

  • There can be no more than six speakers, and no more than four in one room or outdoor space.

  • The music can’t be transmitted further than the physical property boundaries.

Can I put a radio in the kitchen that’s just for the workers?

This can be a legally protected exemption, as long as the music doesn’t bleed into any dining space or area of the restaurant where customers may hear it.

I’m a small business. How would they catch me and why would they care?

Even small, family-owned restaurants are not immune to the risks of publicly playing copyrighted music without the appropriate licenses. Many restaurant owners incorrectly assume copyright holders would only pursue legal action against large or high-profile restaurants that are non-compliant with copyright law.

However, there are plenty of examples of smaller restaurants and bars that have become the target of lawsuits for breach of music licensing laws, and PROs have ways of identifying businesses that are noncompliant.

ASCAP regularly publishes its current list of venues fined for not paying songwriters in their businesses. 

Another example, BMI sent “music researchers” to Tadpole’s to document songs the Tampa bar was playing without the necessary licenses. The result was a $30,000 fine that led to the bar closing its doors for good.

Likewise, Amici III Ristorante in Linden, New Jersey, had to pay $24,000 to BMI, $6,000 each for four songs they were caught playing without proper coverage.

The All-In-One Music Licensing Solution

Creating the perfect backdrop for your guests’ dining experience is about more than just serving mouth-watering dishes. It’s about crafting an atmosphere that transports them away from their everyday troubles and into a universe of culinary delights.

Music is pivotal in this transformation, but you must ensure what you’re playing is compliant and pay music creators and copyright owners. Having only an ASCAP license or BMI License is insufficient, unless you’re carefully tracking and only playing music covered by each specific PRO.

Soundtrack Your Brand offers a comprehensive solution for businesses to play music in their restaurants legally. Monthly and yearly streaming subscriptions cover both sound recording and PRO licensing fees in the U.S. and Canada, including tracking, reporting, and some incredibly helpful made-for-business tools. This means you don’t need to worry about the complexities of licensing. Instead, focus on what you do best—serving up delicious food and exceptional service—and let Soundtrack Your Brand provide the perfect music.

Discover the benefits of Soundtrack Your Brand for your restaurant today!

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