Time to Turn Up the Music - What Do I Need to do First?

Legal + Regulatory, Restaurant Operations,
By Clint Crosby, Shareholder at Baker Donelson

When the owner of a restaurant (or bar) opens up the doors to customers, you want to set the whole scene.  This scene includes the layout, the lighting, the colors, the décor and in most cases, the sound.  A restaurant can define how it wants its customers to feel by choosing upbeat modern songs or slower classical music.  Music can be an up-front feature of the space, or provide more subtle background sound.  But almost every song is covered by the United States Copyright Act, so compliance is key and must be in place before the volume is turned up to eleven!
Each song or piece of music is subject to the copyrights of its owners and cannot be played without an appropriate license.  And in the case of songs, many times there are multiple copyright owners between the writers, publishers and performers.  In order to have the legal ability to publically play a song, the restaurant has to have a license from all of the copyright holders.
After determining what type of music to feature and what type of sound system and speakers to use, the next issue to address is how to provide the music.  Can the music just be provided from an iTunes account and piped throughout?  The answer is no.  The songs purchased through iTunes are for private performance only.  Once a song is played in a restaurant, that is considered a public performance, which is not covered by the license from iTunes (or any other personal streaming service).  What you need are the rights to publically perform the songs you want to play for your patrons.
In the United States there are three primary performing rights organizations ("PROs") in which songwriters, performers, and publishers participate: ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music, Inc.) and GMR (Global Music Rights).  Each of these PROs will provide licenses to the songs in their catalogs.  However, as noted above, in order to have full rights to play a song, you may need to have licenses from multiple PROs.  To guarantee complete coverage, you either need to obtain licenses from all necessary PROs, or purchase a subscription license from a streaming service that has full rights to all of the songs in its catalogs.  With a streaming subscription you have comfort that if the service provides the song, it and you have complete rights.  You may ask, "well if I already have a Pandora or other service can I just use that to stream music in my restaurant?"  Unless you have commercial account with your provider you cannot legally stream music for public performance.  Typical streaming accounts are only for personal, private use.
Inevitably the question is asked, "well can I just not get a license and stay under the radar?"  The answer there is that playing music publically without a license presents a substantial risk.  It is generally viewed as stealing from those who own the rights to the songs.  Copyright law provides for damages from $750 to $150,000 per violation; these damages can be significant and are designed to encourage those using copyrighted works to obtain appropriate licenses.  And the PROs do retain "secret shoppers" to investigate restaurant locations to see if they are publically performing music and if appropriate licenses are in place.  Each of the PROs regularly files lawsuits against locations they find to be in violation of music copyrights.  Typically the cost to settle these suits, or the judgments awarded, are significantly higher than the cost of obtaining appropriate licenses from the PROs or a streaming service.  Again, the system is designed to encourage voluntary compliance as the risk of music copyright violations can be very high.
Some restaurants will try to avoid paying music license fees by playing only commercial radio stations.  There is an exception to the Copyright Act that allows for playing music transmitted via an FCC controlled radio station, but the restaurant location must be smaller than 3,750 square feet and have six or less speakers total and 4 or less speakers in any one room.  And if you have a cover charge to enter, the exception does not apply.  Again, given the relative affordability of getting a license from a streaming service, the streaming subscription is a safer bet than trying to keep within the exception to the Copyright Act.
Music is a key part of the restaurant environment and can go a long way towards bringing in customers and getting them to stay and order.  But, before the speakers are fired up, get your license arrangement in place.  You will sleep better at night knowing the copyright police are not lurking and targeting you as their next example of bad music performance behavior.

About the Author
Clint is a shareholder with Baker Donelson and practices all aspects of intellectual property law.  He also assist his clients with business strategy and dispute resolution, including litigation.