Music Licensing: Playing Their Song

juke boxA couple of years ago, an Urbanspoon reviewer wrote that if Oregano’s Pizza Bistro were a movie, it would win an Academy award. The reviewer added: “From the background music to the star line-up of pizzas, sandwiches and pastas, this place has it all.”

Indeed, background music is to a restaurant what a soundtrack is to a movie. “Music is part of the allure. It’s one of the main ingredients in making a great atmosphere,” says Gary Tarr, advertising manager for Oregano’s, which has 12 locations in greater Phoenix, Tucson and Flagstaff.

Just as playing background music evokes benefits for a restaurant, it also brings legal obligations, if that music is copyrighted.

“The theory behind the law is that music, even if it’s just in the background, is an extra appeal that attracts more customers into a business,” says Henry Abromson, a Frederick, Maryland attorney specializing in intellectual property and entertainment law. “The business is profiting from playing the music, so it should send a little money to the people who created the music.”

Songwriters, composers and music publishers can’t track where and how often their creations are playing and then collect the royalties due them. That’s where the performance rights organizations (PROs) come in, such as the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and SESAC.

The PROs track music usage and collect licensing fees for the performance rights to millions of copyrighted works. They use that money to pay royalties to the songwriters, composers and music publishers who are members of the PRO. The purpose of licensing is to give music creators a fair shake, says Vincent Candilora, executive vice president of licensing at ASCAP. “If you want to use their property,” he says, “you have to get permission and pay them something.”

Licensing fee rates vary widely, depending on seating occupancy, how often music is played, whether the music is live or recorded and other factors. For a 100-seat restaurant playing compact discs for background music, ASCAP’s yearly fee would be $326, according to Candilora. “That’s less than a dollar a day,” he says. “A soda costs more than that.”

Penalties for violating copyright are hefty, ranging from $750 to $50,000 per copyrighted work, perhaps more if the court decides the infringement was willful. Still, restaurateurs often question why they must pay licensing fees, Candilora reports. They figure if they bought a CD or downloaded songs on their iPod, those songs are theirs to enjoy. That’s true when playing music for your personal use. But if you play it in your business for customers, it’s considered a music performance, and copyright protection kicks in.

But didn’t those music creators already get paid? Why should you pay for playing their music? That line of thinking stems from misperceptions about how the music world works, Candilora explains. People confuse the recording artist with the songwriter, who may be the same person but often isn’t.

“If I mention a song like ‘The Gambler,’ the first person to come to mind is Kenny Rogers,” Candilora says. “But a guy by the name of Don Schlitiz wrote that song. Getting royalties from his songwriting is how Don puts his kids through school. People think if you have a hit, you’re an instant millionaire, but that’s so far from the truth.”

A songwriter, composer or music publisher can belong to only one PRO. So a restaurant paying ASCAP’s fee gains access to the 8.5 million songs on ASCAP’s list, but not to the 7.5 million songs BMI manages. That’s why restaurants often obtain licenses from multiple PROs.

Exemptions from fees exist for specific situations. A restaurant with less than 3,750 square feet (including storage, kitchen, bathrooms, etc.) pays no royalties for playing radio and television music only. A restaurant exceeding that square footage pays no fees if:

  • It plays radios and has no more than six speakers total, with no more than four speakers per room.
  • It plays no more than four televisions, each measuring up to 55 inches diagonally, with only one television per room. The limit on speakers is six total and no more than four per room.

Other ways to avoid paying the PROs’ fees include:

  • Installing a coin-operated jukebox for customer use. You’ll owe a fee to the Jukebox License Office in New York.
  • Playing music with expired copyrights. For music written before 1978, copyright protection lasts for the artist’s life plus 95 years. That shifts to the artist’s life plus 70 years for music written after 1978.
  • Subscribing to a background music provider, such as Dynamic Media or Muzak. The latter’s Web site quotes a $40/month rate for its “premium” option, plus one-time costs of $299 for a media player and a $99 activation fee.Otherwise, expect music licensing requirements to apply to your restaurant. Just as you pay a florist for the flowers on your tables, pay the music creator for his or her music. “It’s a cost of doing business,” Candilora says, “and it’s the right thing to do.”

Going Live

guitar in spotlight live entertainment

Live music is a vital part of the business mix at Mississippi Pizza in Portland, Oregon, which includes a restaurant area, a music room for live performances and a bar/lounge. Double doors separate the three spaces.

“Some people want to come in with their family and not hear live music,” says Philip Stanton, who co-owns the business with wife Stephanie. Those customers can dine in the restaurant area, where only background music plays. But others come specifically to hear live music and end up ordering pizza, too. There are two live shows per night, with no cover charges for 80 percent of the shows.

Stanton pays licensing fees to ASCAP, BMI and SESAC, totaling $4,500 per year. “It’s absolutely worth it,” he says. “The live music brings in people who don’t know this neighborhood and normally wouldn’t come to our restaurant. That generates 60,000 people a year who come here to hear music and now know how to get to our place for a pizza.”

Dianne Molvig is a freelance writer in Madison, Wisconsin.

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