Your Music or Theirs? What Every Business Owner Should Know About Copyrighted Music

I bet you can’t remember the last time you entered a bar, restaurant, or small business and didn’t hear music from a jukebox, speaker system, or transistor radio. Okay, maybe not a transistor radio. The point is this: music is pervasive, particularly in public places. iTunes, Sirius/XM, Pandora, Spotify…the list of music sources and streaming platforms is tremendous and the money made by these providers and the owners of the rights to that music is astronomical.

As great as that revenue may be, the simple fact of the matter is the owners of that music (all of which is copyrighted) are well aware that there is as much money lost in illegally pirated or shared music every minute of every day. The internet has dramatically changed the music industry and made nearly everything accessible with the stroke of a key. No longer do you have to wait for that song on the radio or buy the record, cassette, eight-track, or CD. Kind of makes you wistful for Columbia House and eleven records for a penny, doesn’t it?

The ease with which we now obtain that music-even if we’ve paid for it has created the mistaken impression that it is “ours”.  Unfortunately, nothing could be further from the truth in commercial and business settings. Also unfortunate is this fact: copyright holders are pursuing businesses and individuals with increasing frequency for violation of Federal copyright law. The penalties are crippling and the law is heavily stacked in favor of the copyright holder.

The owners of copyrighted music, ASCAP and BMI being the biggest, have long enforced their rights for violations. In the last fifteen years they’ve picked up the pace as they’ve seen revenue from music sales fall.

Their job is made easier as nightclubs, bars and restaurants actively promote live music and karaoke on websites, Facebook and other social media.

Here’s what usually happens: you get a phone call or a letter from a representative of one of these companies. It may sound like a sales pitch-it is. But unlike almost any other vendor you deal with, you can’t say “no”. That is, if you’re playing that iPod or have some guy on a guitar in the corner…

They’ll send you a “survey” and based on square feet, the number of nights that you have live music, karaoke or the presence of a juke box they tell you what you owe if you want to play their music (by the way, getting a license from one copyright holder may not cover all the music that’s played in your business and if it doesn’t you may need licenses from multiple sources).

If you blow them off they’ll give you another chance. In fact, I’ve seen business owners receive better than 50 phone calls and 30 letters before any action was taken. At some point they give up.

And that’s when it can get bad.

The company will send a few investigators in to see your place on a night you’ve scheduled live music (it was on Facebook so you kind of invited them in). They’ll eat lunch or dinner in your place if you serve food (and keep the receipt to further prove they were there) and then they’ll start their tape recorders. Okay, they probably just use their phones. They’ll record as many songs as they need and leave. Best case scenario: you made a few bucks off a cover charge (which isn’t required for there to be a copyright violation), meals and drinks. You’ll also get a certified letter with a packet of information that you now owe the holders of the copyrights you violated over $50,000.00. And that’s the best case scenario.

I know. I know. You bought those songs on iTunes or you were simply hooking up speakers to a streaming service. There was no cover charge for the band and you weren’t in charge of them anyway. You can’t tell them what to play. They should have obtained licenses to play that sad version of some Justin Bieber song. By the way, if that’s what your bands play, you may no longer be in business when you read this post.

None of the excuses matter.

“I bought the music on iTunes. I paid for the CDs that I made the mix from….”-May be true. Definitely irrelevant. You bought those songs for your use. Your personal use. That purchase ONLY covers private listening. When you plug that iPod in at your business and share it with your customers it becomes a “public performance” and for that you need that pesky license.

“It’s the musician’s responsibility to get the license.” Not according to Federal law and that Federal judge who ultimately hears that case (that’s another thing, you won’t have the pleasure of addressing these issues in your home county’s Circuit Court). It also begs the question: are you trusting four kids with an amplifier, two used guitars and a broken drum kit to get a music license?

Your business benefitted (a cover charge, drinks and food sold, etc.). You are liable and this is non-delegable (it’s on you).  Believe it or not, you may be liable if you’ve leased your building to someone else who is running a bar and violates the law. Far fetched but possible if they can show that you knew there was likely music played at your venue.

By the way, the copyright holders are smart enough not to waste the time pursuing the members of that band for the money they’re owed.

“I just turned on the radio or television and had CMT, MTV (do they play music videos anymore?) or one of the music only channels on. I paid for that.” You may not have a problem. Did you have a commercial license from Dish, DirectTV, your cable provider? If not, that’s a different post we’ll do because you’re in trouble with them. As for BMI, ASCAP etc., it’s going to depend on how many square feet you have, the number of televisions you have, how many there are in any room, whether loudspeakers were used to amplify the broadcast and the size of the televisions.

“Ha! My bar/restaurant/business is a corporation or limited liability company! They can’t touch my personal assets!” Better hope that you’re not an officer with a “direct financial interest” in the company and lack the ability or right to supervise the establishment/business. Otherwise, you may have your personal assets at stake.

“It was for charity!” If the holder of the copyright has permitted the use, fine. Otherwise, get ready to open the checkbook. And the fact that your business made no money or is “in the red”? Doesn’t matter.

“I have a jukebox only. I’m covered, right?” A lawyer’s favorite answer? Maybe. It depends if the jukebox is licensed with the Jukebox License Office (JLO). I’m not making that up.

If you have a jukebox through a service, get proof that it’s got the JLO seal of approval. If you own the jukebox and it’s stocked with 45’s of Patsy Cline then you might be a … you might have a problem.

Folks, the penalties are severe. Each song constitutes a violation and each violation is between $750.00 and $30,000.00. Yes, $30,000.00 for each song. To get those kinds of damages they generally need to show more than just plain use: they have to show that you purposefully disregarded their rights to the music. And that’s when they trot out the letters (sent by FedEx, certified or otherwise) and the phone calls to show that they gave you a chance. Oh, yeah. They also get attorney’s fees and costs. And get this: it’s probably not dischargeable in bankruptcy.

If you’ve read this far, know this: this post is not intended to drum up business for our firm and this post neither creates an attorney-client relationship nor is intended to offer legal advice. The simple fact is that if you get sued for copyright violation talk to a lawyer. We’ve had clients in northeast Missouri tangle with copyright holders. There will be more businesses that find themselves on the wrong side of these folks.

Our best suggestion: make sure you aren’t doing anything to cross the line with these people.

And don’t play Justin Bieber.


Neil Maune

This information is not designed to solicit representation or offer legal advice and does not form an attorney-client relationship.