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Sound advice for businesses

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When sitting down for a date night dinner in your favorite restaurant, do you notice the music playing overhead to set the mood for the restaurant? Music in restaurants and other small businesses is expected and often missed when not present. However, as many local small restaurants and businesses are discovering, music comes at a price.

United States copyright law prohibits the public performance of musical compositions without the permission of the copyright holder. Under the Copyright Act, a public performance includes live performances and playing sound recordings from an iPod, CD, or other system for the entertainment of customers, even when those customers are not charged for listening. Failure to obtain the appropriate copyright permissions can lead to large fines for copyright infringement. Violations can run $750 to $30,000 per violation plus costs and attorney fees for enforcement.

So how does one get the permission of the copyright owners to play music in a business and avoid copyright liability? Performing rights organizations (PROs) are licensing companies that manage the rights to musical works for copyright owners. PROs sell licenses to businesses that allow them the rights to play music, whether by live or recorded performance, in the business.

Three large PROs manage the large majority of musical compositions in the U.S.: ASCAP (the American Society of Composers, Authors, and Publishers), BMI (Broadcast Music, Inc.), and SESCAP (Society of European Stage Authors and Composers). Unfortunately, the licenses issued by these PROs are not cheap.

For a restaurant that has a maximum capacity of 100 people, a yearly license to just one of the PROs can run upwards of $700 for daily recorded music and two nights of any live music performance (even a jazz pianist playing in the background). Prices increase if your business has dancing or charges a cover. Because the PROs will not provide lists of the music rights that they manage, many businesses end up paying all three PROs for licenses resulting in thousands of dollars per year—a daunting cost for many small businesses.

As several local restaurants have discovered in the last year, the PROs are relentless and sometimes harassing. One restaurant owner received daily phone calls from an angry representative of one PRO who threatened to sue for copyright infringement unless the business purchased a license for live and recorded music performances.

Being on the receiving end of such communications can be frightening. PROs file hundreds of lawsuits against small businesses every year to enforce the copyrights they manage. Fortunately, small businesses do have some options to avoid liability.

While many small businesses purchase licensing agreements from the PROs, there are alternatives. The Copyright Act exempts certain businesses from licensing requirements.

Broadcast television and radio transmissions do not require a license to transmit if your restaurant is less than 3,750 square feet, you have less than four loudspeakers or televisions, and customers are not charged a fee to watch the TV or listen to the music (other businesses must be less than 2,000 square feet for this exception).

Internet radio stations, like Pandora and Spotify, may not be included in this exception, so businesses should take care using Internet radio broadcasts. Businesses may also opt to use satellite radio programs like SiriusXM for Business that have licenses through the PROs to transmit copyrighted material.

Jamendo, a free music service that provides music from emerging artists whose copyrights are not managed by BMI, ASCAP, or SESAC is another interesting alternative. In the end, small businesses must chose an option that works within their budgets if music will be played in their business or risk the costs of potential copyright infringement claims.

Erin McCool is an attorney with the Wenatchee office of Ogden Murphy Wallace, P.L.L.C., practicing in the areas of litigation, employment & labor law, and land use & water.