Performance Rights Organization Licenses: What Are They and Do You Need One

Under U.S. copyright law, recorded music contains two distinct copyrights: (1) for the lyrics and musical composition; and (2) for any recordings of that composition.  Of course, if there is no recording of a written composition, there is only one copyright.  The songwriter’s copyright is typically owned by the songwriter/composer or his or her publishing company.  The sound recording copyright may be owned by the recording artist, but is often owned by his/her/their record label.

As authors of musical compositions, songwriters have the exclusive right to publicly perform their musical compositions and to allow others to do so.  This includes “cover” songs performed live, and recordings broadcast on TV, streaming, etc.  If a third party wants to record a cover of a composition – i.e., Jimi Hendrix’s cover of the Bob Dylan composition, All Along the Watchtower – they need a license from the owner of the musical composition, but not from the owner of any other sound recording of that composition.  However, if one wants to use a particular sound recording, they need permission and a license from both the copyright owner of the musical composition and the sound recording.

But a composer cannot be expected to scour the world looking for every bar, restaurant, fitness studio, etc. that is publicly performing their compositions and demand compensation.  And establishments that use recorded or live music, such as nightclubs, restaurants, bars, retail stores, etc. can’t be expected to seek out and find the copyright owner of every song they play and seek a license.  That is where performance rights organizations (“PROs”) come in.

PROs collect income on behalf of songwriters and music publishers when a song is publicly broadcast or performed live and pay royalties to the copyright owners.  Musical composers can sign up with a PRO, such as BMI, ASCAP, and SESAC, which PRO will, in turn, grant licenses to bars, restaurants, websites, gyms, and a broad range of other venues allowing them to publicly perform that composer’s songs in their establishments.  Typically, the cost of that license will be based on the size of the venue, the number of loud speakers, and other factors.  Licenses are generally granted and paid for annually, although it is also possible to obtain a license for a one-time or limited run event.  The license fees collected are then distributed to the composers or publishing companies (whoever owns the copyright in the composition), roughly based on the number of times their songs are being publicly performed, with the PRO taking a portion of the fees collected for their efforts.

In addition to granting public performance licenses, the PROs will periodically send their people out to venues to determine if they are publicly playing live or recorded music without a license and, if so, that establishment will usually get a demand letter from the PRO requiring the establishment to obtain a PRO license in order to continue playing music at the venue going forward and demanding payment of monetary damages for their past copyright infringement(s).  Here at Crown^®, LLP, we often find out that a PRO has been looking at establishments in a particular area because we suddenly get calls from venue owners in that area who have received demand letters from the PROs.  As a venue owner, the PRO’s claim for damages is strong because it is a clear copyright infringement.  So, venue owners in this situation will likely have to pay to settle the past infringement claim(s) and certainly have to pay for a license allowing them to continue playing music at their venue.

There are exceptions that allow establishments to play music without a PRO license.  The most common exception is quite narrow.  Under § 110(5) of the Copyright Act there is a so-called “small business” or “mom & pop” exemption.  In short, a venue owner can play music in their establishment without a public performance license if the following criteria are met:

1. They are only playing the radio or television (not CDs, vinyl, streaming, etc.); and
2. They are an establishment of less than 2,000 square feet, or are an establishment of less than 3,750 square feet that provides food and/or drink.

If a venue has more square footage than that stated above, the establishment still may qualify for this exemption, allowing it to play the radio or TV, so long as the following is true:

1. There are no more than six (6) loudspeakers, of which not more than four (4) are located in any one room or adjoining space; or
2. There are not more than four (4) audio-visual devices (aka TVs), of which not more than one (1) device is located in any one room or adjoining space.

As such, your small, local, corner bar with a TV in the corner may qualify for this exception to the PRO license requirement.  There are other exceptions, too, that are not quite as common.

In short, if you have live or pre-recorded music that is being publicly performed in your venue, you more than likely need a PRO license.

If you have been contacted by a PRO, or have questions about obtaining a PRO license, please contact us here at Crown^®, LLP.