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Every year, and particularly in the summer months when outdoor concerts and dining are popular, we receive phone calls and emails from owners of bars, restaurants, and other businesses that play music for their patrons. Usually, they are calling because they received a letter from a company in the music industry demanding that they pay licensing fees to continue to play music in their establishment. They ask us if the letters are legitimate; if they really have to pay licensing fees to play music that they purchased; and if they really have to pay licensing fees for cover songs that their house band plays.

The short answers: Yes, yes, and yes!

We still see a great deal of confusion about how one may legally play (“perform”) copyrighted songs in public places and in businesses. Most of the confusion is due to a lack of understanding of what it means to “own” a copy of a recorded piece of music, and when playing that music is permitted. Here are five things everyone should know about music copyrights.

Purchasing a music recording gives you only a limited license to play that music privately.

When you buy a song or an album from iTunes® or any other digital music provider, what you really have purchased is a single copy of that song and a license to “perform” that song privately. The same is true for purchases of music on physical media, such as CDs or vinyl records. Under U.S. Copyright Law, every time you cue up your favorite song and blast it in your car on the way home from work, that counts as a “performance” of that song, albeit a private one. Your purchase of the song or album did not grant you a license to make copies of the song, distribute copies of the song or make derivatives of the song. Nor did your purchase of the song grant you a license to “publicly” perform the song. A “public” performance is generally in a venue where an admission is charged or where there is likely to be a substantial number of persons who will hear the song.

The song is copyrighted, not just the recording.

Copyrights on music protect both the underlying song and the recorded performances of the song (“sound recordings”). When the band strikes up a popular song, it is not publicly performing the sound recording, but it certainly is performing the song. That song is protected by Copyright that belongs to the original artist, the songwriters, and (probably) a music publishing company. Under U.S. Copyright Laws, each of these interested parties is entitled to be paid when the song is performed. While Copyright Laws do permit bands to “cover” or play a song that was released by another artist or group, licensing fees are required to do so.

Turn up the FM radio.

Perhaps the most significant exception to these licensing requirements is music that is being played on the radio. It generally has been legally acceptable to turn on the local music station and play it in your business, because the license to perform the music publicly already has been purchased by the radio station. As long as you aren’t charging admission to listen to your radio — which might have worked in 1925, but is unlikely to get much traction today — you’re probably in the clear. There are, however, important limits. Any food service or drinking establishment that is larger than 3,750 square feet, for example, may be required to secure additional public performance rights to share a radio broadcast with its customers.

Satellite radio plays by different rules.

Like terrestrial radio stations, satellite radio stations have paid for a public performance license. In turn, they sell listeners a subscription to access their broadcasts, priced according to how they intend to use the service. Satellite radio services typically offer different subscription packages for private individuals and for public businesses. If a business plays a satellite radio music station for the benefit of a public audience, it must purchase the subscription service that covers that use. Trying to save money by purchasing a residential satellite radio subscription and then using it at a business is asking for trouble.

Jukebox Licenses Are Still Available.

Jukeboxes are another widely misunderstood category. Just as buying an album doesn’t allow you to conduct public performances of that album, buying a jukebox does not give you permission to publicly perform the music stored in that jukebox. Fortunately, jukeboxes are serviced by very convenient licensing terms. The aptly named Jukebox License Office is operated with the cooperation of the major music licensing organizations. As of May 2015, the organization charges $476 for an annual license for one jukebox. Volume discounts apply; licensing three jukeboxes costs $696 for 2015.

Obtaining a license often is not that expensive.

Outside of jukeboxes, licensing music for public performance gets a bit more complicated. The different licensing organizations hold the public performance rights for different songs. Recorded music and live music performance are covered by different licenses. ASCAP and BMI are two of the bigger licensing organizations with established rates for businesses of various sizes. The Harry Fox Agency manages mechanical licenses on music. Guidance from an experienced intellectual property attorney can help the owners of businesses that want to play music for their customers without running afoul of the law.

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Panitch Schwarze commits the time to listen to and evaluate each client’s unique needs so we can advise on the best forms of IP protection.