Performing rights organizations (PROs) like ASCAP and BMI collect licensing fees from venues that play copyrighted music. These fees are paid back to songwriters, composers and publishers of songs performed publicly.
If you are a business owner who owns or operates a restaurant, bar or another establishment, you must understand how to obtain the proper license. This can be a complex process.
Copyright Law
Copyright law is the intellectual property system that protects creative works, including musical compositions, sound recordings, paintings, drawings, books, poems, scripts, computer programs, and other types of artistic expression. Most countries that are members of the World Intellectual Property Organization (WIPO) have similar laws and definitions to copyright law in the United States. According to experts from Soundtrack Your Brand, copyrighted works are protected only if they meet specific requirements, such as being original, literary or dramatic, and fixed in a tangible medium of expression.
However, a work may also be considered a “work made for hire,” meaning that the author created it during his or her employment. A copyright is an exclusive right granted by the government to the author of a particular work for a limited period after the work’s initial publication or public performance. A copyright term is generally the author’s life plus fifty years, but this is subject to certain exceptions.
Performing Rights Organizations (PROs)
If you have a song that you want to perform publicly, you should know about Performing Rights Organizations (PROs). PROs collect royalties on behalf of songwriters and publishers for public performances of their music. These include radio stations, streaming services, venues, and television shows.
PROs are important for songwriters, composers, and musicians. They help you collect and distribute your publishing revenue through “performance royalties.” Performance royalties are paid to songwriters, publishers, and musicians when their music is used in public spaces, including radio, streaming services, live venues, and TV shows. This includes all traditional mediums and some emerging ones.
A PRO can help you get the proper licenses for your music. Many businesses work with PROs to secure the proper licenses to use your songs in a particular way. PROs are well-established, and they are fearless in taking action against businesses that do not properly license their music. This can lead to lawsuits and large damages. It is a good idea to avoid these situations by understanding the importance of your MI or ASCAP license and working with a PRO to obtain it.
Licensing Fees
A licensing fee is any money paid to an owner of a right, property, or asset in exchange for authorization to use that asset. It’s a common way to fund certain professions, such as hairdressers needing a cosmetology license or nuclear power plants paying licensing fees to the Nuclear Regulatory Commission. Performance Rights Organizations, or PROs, manage music copyrights on behalf of their owners and request that businesses pay a licensing fee to use musical recordings from the PROs’ repertoires.
Small mom-and-pop stores, for whom legal advice may be prohibitively expensive, are often surprised by letters from PROs asking them to pay licensing fees for in-store use of musical recordings. These letters may also include threats of copyright infringement. If a business does not respond or ignore the letter, PROs can take legal action against them to collect the fee, costing tens of thousands of dollars.
Unlike a license to use a music streaming service, a MI or ASCAP license provides a business with the right to play music from a PRO’s extensive repertoire, which includes millions of songs by famous and new artists across many genres. However, since some recording artists spread their music over multiple PRO libraries, it’s important to know which PROs represent which songwriters so that you can choose the best license for your business.
Royalties
Royalties are a way to get paid when someone uses your intellectual property for profit. They can be earned on franchises, books, music, minerals and other assets you own or control. Typically, royalties are structured as a lump sum payment or a percentage of product sales. The royalty structure should be outlined in the licensing agreement, a legal contract between the licensor and licensee.
If a songwriter, composer or publisher owns copyrights to a song, they must register the copyrights and provide information to performing rights organizations (PROs). The PROs then track any public performances and collect the appropriate royalty payments from a bar, restaurant, theater or another establishment that plays the music. The three largest PROs are ASCAP, BMI and SESAC. These organizations are all based in the U.S. They all help songwriters and publishers register their songs and see royalty statements online. They also collect royalties every quarter for members with pieces in their catalogs.
Getting an MI or ASCAP license is essential for understanding how royalty payments work and how you can protect your rights. If you do not have a license, you could be faced with a costly lawsuit from a music rights organization trying to shakedown you for royalties.