Music Licensing’s Complex and Opaque System Remains a Challenge for Many Small Business
Have you ever wondered how songwriters get paid when a business or venue plays one of their songs? Whether it’s karaoke night at the local bar or simply background music played throughout the day, federal copyright law often requires business owners to get advance permission prior to playing a songwriter’s latest hit.
In most instances, advance permission comes in the form of obtaining a repertoire-wide or “blanket” license from one, if not all, of the ever-expanding list of Performing Rights Organizations, also known as PROs. These organizations serve as intermediaries between songwriters and local businesses who want to publicly perform music on behalf of their customers.
In the U.S., ASCAP, BMI, SESAC, and GMR currently serve as the nation’s leading PROs, although more have recently entered the market. It’s important to get the proper blanket licenses from them to make sure that songwriters get paid for their work; and, equally important, to ensure the business doesn’t get sued for copyright infringement. A successful lawsuit for copyright infringement could easily bankrupt a once thriving business, thanks to crippling statutory damages. Statutory damages are usually between $750 and $30,000 per infringed work. However, the damage amount can be increased up to $150,000 per work if the infringement is found to be willful (intentional).
Each of the PROs offers different blanket licenses that cover its unique catalog of musical works, and it is the responsibility of the business owner to make sure they buy the appropriate license for whatever music they plan on playing. All of this sounds (pun intended) easy right? Well, not so much.
In every case, it is impossible to know with any certainty which musical works are included in a PRO’s catalog. Most musical works average four to six co-writers and each songwriter can be represented by a different PRO. For a major songwriter like Prince, you should contact GMR. However, if you wanted to license the right to publicly perform Mark Robinson’s “Uptown Funk,” which has 11 co-writers, you might have to call ASCAP, BMI, SESAC, and GMR — and potentially any other PRO that enters the market. Because while PROs have searchable databases on their respective websites, and ASCAP and BMI even have a joint database called Songview, they also include giant disclaimers stating the information may not be accurate. And so businesses cannot rely on this information. BMI states that it “cannot give a blanket guarantee regarding the accuracy of the data.” ASCAP warns users that “[a]lthough ASCAP uses reasonable efforts to update ASCAP Repertory Search and improve the accuracy of the information contained therein, ASCAP makes no guarantees, warranties or representations of any kind with regard to and cannot ensure the accuracy, completeness, timeliness, quality or reliability of any information made available.” (More to come in future blogs on the lack of access to reliable data and the complexities of licensing fractional works.)
Without any transparency into who owns what, most businesses are forced to secure licenses from all of the existing PROs and pay thousands of dollars in fees or risk legal exposure to the crippling statutory damages mentioned above. The confusion, the costs, and the potential liability have left many businesses asking if it even makes sense to play music.
This hurts businesses as well as songwriters and customers, and impacts everyone’s ability to enjoy music in the community. Without transparency in music licensing, the entire music ecosystem suffers.