Understanding P.R.O.’s for Small Business

We got this fun graphic from indie-music.com

We got this fun graphic from www.indie-music.com

So you have a small business, maybe a restaurant or a bar, and you decide it would be fun (and maybe profitable) to have a musician come in and play for a few hours on Friday and Saturday night.  He/she comes in and plays familiar old tunes for a few hours, you pay them $100, plus they make some tips and everyone’s happy.  It’s fine and dandy for a few months and then you start getting letters, emails, or phone calls from an organization called BMI demanding that you pay them thousands of dollars for some kind license or something.  You’ve never heard of it before, so you ignore it until one day when they hit you with a real actual letter of intent to sue.  You settle with BMI and tell the musicians that you can’t afford to use them anymore.  It seems too quiet, so you start playing CDs over the PA, maybe even hire a DJ.  Then you get contacted by ASCAP wanting essentially the same the same thing as BMI.  It’s confusing, Who are these people?  How many of them are out there? And why do you have to pay them at all?

Here’s what they are:

Performing Rights Organizations.  There are 3 of them: ASCAP, BMI, and SESAC.  What they do is collect licensing fees on behalf of songwriters/musicians/publishers (or whoever owns the copyrights to the songs) and then they use that money to pay those copyright owners.  So when a musician (any musician) plays an Elvis song in public, Elvis’ estate is entitled to a small payment. This applies to recordings as well. Each songwriter signs up with one of these PRO’s to handle the collection of these fees/payments, because, obviously, even Kanye West can’t keep track of every time one of his songs gets played somewhere.  So these PRO’s sell licenses to businesses which allow those businesses to play music from the organization’s catalog. Then, the PRO uses that money to pay the artists.

What if I have the musician only play originals that he/she wrote?

You still have to pay.  The musician should be a member of one of the PROs and if he/she plays his/her music in public he/she is entitled to be paid for it (in addition to what you may be paying them for the live show).  Sure, some musicians don’t know that, or care, but all it takes is for a musician to play one song they didn’t write or one of them to report their playlist to a PRO and you’re screwed.

What if I’m a retail store and just play the radio for background music?

It’s still a public performance of the music in question and you are still using that music in your business to improve sales or the experience of being in your business.  You have to pay.  Services like Muzak usually include licensing in with the fees you pay them.

Do I have to pay all 3 of them?

Yes.  Each PRO has a different catalog of artists and songs.  It’s really hard to keep track of which songs are in which catalog and play music from only one of them.

What about a jukebox?

It depends on if you are paying a service to provide the jukebox music or if you own the box and put the music you choose into it.  If you pay for a service, you are probably paying the licensing fees as well.  If you load it up yourself, you probably need to get those licenses.  Hopefully, the jukebox brings in enough revenue to pay for those fees.

If this doesn’t answer your questions, and especially if you are being sued over this kind of stuff, it’s a good idea to talk to an experienced Entertainment Attorney (not just your usual attorney).  You need one with education and experience in the Entertainment field.

If you need more info here are links to the 3 US PRO’s:

ASCAP: http://www.ascap.com

BMI: http://www.bmi.com

SESAC: https://www.sesac.com
Other countries have different PRO’s, so if you aren’t in the USA, you need to look up the PRO(s) that service your country.