MUSIC LICENSING FOR BUSINESSES IN EUROPE: THE IMPORTANCE OF PROPER LICENSING
So you want to play music in your business? Great!
But before you reach for that AUX cord, make sure you’re legally covered.
A lot of people assume that it’s okay to play music off of your phone or computer in public, especially your place of business. After all, silence is awkward. You, your employees, and your customers don’t want to work, shop, or eat without something to fill the void.
But while you may pay for a personal subscription streaming service such as Apple Music or Spotify, those personal music services are not authorised for use in a commercial environment. To play music in a place of business, you are required to pay a licensing fee.
A music licensing fee is a form of payment that allows the artists, authors, composers, and publishers to be compensated for their music. These fees are handled by what are known as Performance Rights Organisations, or PROs. Sometimes also known as a performing rights society, PROs serve as an intermediary between the music industry and those who wish to use copyrighted material in public locations and businesses.
The four biggest PROs in Europe are SACEM (France), GEMA (Germany), PRS for Music (UK) and SIAE (Italy), but there are many more across other European countries. Businesses can be subject to significant fees and legal penalties if they don’t secure the proper rights to the music they play.
GET TO KNOW YOUR PROS
- SACEM (Société des auteurs, compositeurs et éditeurs de musique) – France. Founded in 1851.
- GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte) – Germany. Founded in 1947.
- PRS for Music (Performing Right Society for Music) – UK. Founded in 1914.
- SIAE (Società Italiana degli Autori ed Editori) – Italy. Founded in 1882.
- AKM (Autoren, Komponisten und Musikverleger) – Austria. Founded in 1922.
- SUISA (Société Suisse des Auteurs) – Switzerland. Founded in 1923.
- STIM (Svenska Tonsättares Internationella Musikbyrå) – Sweden. Founded in 1923.
- TEOSTO (Teosto) – Finland. Founded in 1928.
- ZAIKS (Związek Autorów i Kompozytorów Scenicznych) – Poland. Founded in 1927.
Keep in mind, there are various types of licensing a business may need to secure, and each comes with their own set of rules, regulations, fees, and fines. For instance, a venue that wants to broadcast music on an audio system and also host cover songs performed by a live artist would require two separate music licences.
While it can be tempting to ignore the need for licensed music altogether and take the chances of getting caught, it may not be in your best interest. Be warned, the fines for failure to pay a fee are not cheap.
In 2015, one business sued by the Spanish music rights organisation – the Hotel Jardín Tropical – was ordered to pay a fine of €200,000 for failing to pay the proper licensing fees.
This case serves as a reminder of the potential financial consequences of not obtaining proper licences for music used in businesses.
Range of fines per incident for unauthorised performances of musical works.
It’s important to note that fines for using music without proper licensing can vary depending on the country, the type of business, and other factors. While some businesses may financially be able to pay the fines, it’s certainly not always the case. It’s possible that a business could face financial hardship or even closure as a result of a fine or legal action related to music licensing.
Another consideration is that, aside from live shows and merchandise, licensing fees are one the few ways artists can make money from their music. Since the rise of music streaming, album sales are hardly a viable option for musicians to make a living. So not only is it illegal to play music that is not specifically licensed for business, but it also robs the artists and musicians of income that rightfully belongs to them. In fact, over a billion dollars of revenue is lost from unlicensed music each year.
DID YOU KNOW?
“Happy Birthday” used to be copyrighted music. Music publisher Warner/Chappell collected an estimated $2 million annually from the use of “Happy Birthday” in movies and television shows. It wasn’t until 2016 that “Happy Birthday” was officially entered into the public domain.
Here are a few examples of just how steep the fines can get:
- In 2015, “Hotel Jardín Tropical” was fined €200,000 for playing music without a license. The fine was imposed by the Spanish music rights organisation, SGAE. (Source: El País, “El Hotel Jardín Tropical deberá pagar 200.000 euros por la música de sus actos,” March 16, 2015)
- In 2021, a nightclub in France called “La Suite” was fined €10,000 for playing music without a licence. The fine was imposed by the SACEM, the French music rights organisation responsible for collecting and distributing royalties to songwriters and music publishers. (Source: France Bleu, “Lourde amende pour la discothèque La Suite à Toulouse pour diffusion de musique sans licence,” February 10, 2021)
- In 2020, Greek nightclub “Bolivar Beach Bar” was fined €30,000 for playing music without a licence. The fine was imposed by the Greek music rights organisation, AEPI. (Source: Greek City Times, “Bolivar Beach Bar in Greece hit with €30,000 fine for playing music without permission,” October 20, 2020)
- In 2019, a bar in the UK was fined £10,000 for playing music without a licence. The fine was imposed by the UK music rights organisation, PRS for Music. (Source: Lancashire Telegraph, “Darwen bar owner ordered to pay £10,000 for playing music without a licence,” May 22, 2019)
Thankfully, there are many companies that provide music for businesses and will cover all of the licensing issues and fees on your behalf. Mood Media, for instance, is one such company. And with nearly a hundred years in the music industry, they have the experience and knowledge to work with you to find the music that best fits your business. These music subscription services offer professionally designed music playlists that are specifically created for business use. The added advantage is that you benefit from music that is screened to remove any lyrical content that could be considered offensive, and – depending on your agreement – is usually ad free as well. Purchasing music for business service also means that all of the appropriate licensing fees are covered, so you can play the music you want, worry free.
$2.6 BILLION
Amount of lost revenue to artists due to unpaid licensing.
The bottom line is, you should be paying for the music you use. Not only do you avoid hefty fines, but it’s also the right thing to do.
TERMS TO KNOW
PROs (PERFORMANCE RIGHTS ORGANISATIONS)
Groups that are responsible for collecting income on behalf of publishers and songwriters when a song is publicly broadcast or performed. Public performances can include being played on television or radio, in bars and restaurants, or played on websites. The organisations collect licence fees for use of music, which they pay out to the appropriate parties after taking a small fee.
MASTER RIGHTS
The right of the actual sound recording, owned by the record label and/or artist. To make a copy of the sound recording, an individual or a business requires a licence from the owners. Mood has direct licences with all the major record labels – Universal Music, Warner Music – and nearly 5,000 independent record labels.
MECHANICAL RIGHTS
The right of the author, composer and publisher of the musical composition, to the song’s music and lyrics, referred to legally as the “underlying musical work.” To make a copy of the song, a business needs to secure the mechanical rights from the publisher directly or through The Harry Fox Agency who may be the publisher’s administrator. Mood has direct licences for the mechanical rights with thousands of catalogues throughout the world as well as with the Harry Fox Agency.
SYNCHRONISATION RIGHTS
The rights granted by the owner of the Master Rights (the record label and/or artist) and Mechanical/Performance Rights (composer, author and/or publisher) to authorise the duplication, distribution, and performance of a musical work embodied within a sound recording to be ‘synchronised’ with various audio/visual media outputs. These outputs may include film, television shows, advertisements, video games, movie trailers, etc.
PERFORMANCE RIGHTS
The right to publicly perform a musical composition within a business. A performance includes the use of any form of music player, including but not limited to, an MP3 or CD player or any form of broadcast, such as AM/FM or satellite radio. These rights are either administered directly from the publisher or through performing rights organisations such as PRS for Music (Performing Right Society for Music), SACEM (Société des auteurs, compositeurs et éditeurs de musique) or GEMA (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte). Mood holds direct licences with all of the above as well as other performance rights organisations.
COMPILATION CDS, PRE-LOADED PORTABLE MEDIA AND MUSIC DOWNLOADS
In order to produce a compilation CD, produce pre-loaded portable media or provide music downloads, a business or individual requires a licence for each song from the record label and/or artist (owners of the Master Rights) and from the author, composer and publisher (owners of the Mechanical Rights).
PUBLIC DOMAIN
Creative work that is not protected by intellectual property laws such as trademark, copyright, or patent laws.
SOURCES
https://moodmedia.com/en/sound/music-licensing/
https://arstechnica.com/tech-policy/2016/02/happy-birthday-is-public-domain-former-owner-warnerchapell-to-pay-14m/
https://www.lancashiretelegraph.co.uk/news/959111.judge-pulls-plug-pubs-music/
https://www.sacem.fr/
https://www.gema.de/
https://www.prsformusic.com/
https://www.siae.it/
https://www.akm.at/
https://www.suisa.ch/
https://www.stim.se/
https://www.teosto.fi/
https://www.zaiks.org.pl/
https://arstechnica.com/tech-policy/2016/02/happy-birthday-is-public-domain-former-owner-warnerchapell-to-pay-14m/