Music Licensing: What Your Business Should Know About “Public Performance” Licenses

Author: Beth Milito Date: May 02, 2008

ASCAP, BMI, and SESAC Target Small Businesses

The American Society of Composers, Authors, and Publishers (ASCAP), Broadcast Music, Incorporated. (BMI), and the Society of European Stage Authors and Composers (SESAC) are organizations that collectively hold the “public performance” rights to 97 percent of the music played in the United States.
These three groups collect licensing fees for public performances of music and distribute those fees to their members. A typical ASCAP, BMI or SESAC demand letter asks for anywhere from a few hundred to several thousand dollars for a one-year license. They often target small businesses in the retail, food service, and entertainment industries.
What is “public performance” of music?
A public performance is music played "in a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered." 
Common forms of public performance in small businesses include playing CDs or MP3s as background music (or hold music), bands or other live performances, and karaoke.
 “Public performance” requires a separate license
If you have live performers or play legally purchased CDs or MP3s, public performances of those require a separate license from the copyright holder. If you lease a jukebox, or pay a service to provide background music for your establishment, then you may already be licensed. You should talk to your provider to make certain. 
Radio or Television Broadcasts
There are two “small business exceptions” that allow certain small businesses to play radio or television broadcasts in their establishments without having to pay any additional licensing fees. In order to qualify for these exceptions, the business owner must not charge an admission fee. The exceptions apply to:
(1) Any establishment with less than 2,000 gross square feet, and any food service or drinking establishment with less than 3,750 square feet; and
(2) Any business establishment with greater than 2,000 square feet, and any food service or drinking establishment with greater than 3,750 square feet provided that they use fewer than 6 speakers or TVs, no more of 4 of which are any one room, and with a screen size of less than 55 inches.
Avoiding Copyright Violation
If you use live bands or musicians, make sure they are playing entirely original works and not covers of other songs. If you use broadcast radio or TV for background music then make sure you comply with the square feet or equipment restrictions discussed above. If you use a service to provide background or hold music, ask your service provider directly if their fees include ASCAP, BMI and SESAC licenses, and make sure they state so in your service agreement. If you are playing CDs, MP3s, karaoke songs, or have live performances that include popular music or music by other artists, then you may need a license from ASCAP, BMI and SESAC. If in doubt, consult an attorney.
Additional Questions
If you have additional questions please consult the following factsheet at our NFIB website.
May 17, 2012

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