United States: What Your Craft Brewing Business Needs To Know About Music Licensing

Last Updated: January 13 2017
Article by Henry M. Abromson

As increasingly more breweries, distilleries, wineries and even farms convert their operations from a more traditional manufacturing and distribution model to a model which incorporates hosting and serving patrons on-site, numerous legal issues arise. One of those very important but oft-neglected legal issues, for businesses that offer music, whether live, by digital stream or by radio, is the issue of music licensing.

When Is A Public Performance License Required?

Almost all businesses, whether a retail store, spa, restaurant, bar or agri-business, that publicly broadcast music through a radio, digital stream or other means or offer live public performances of music in connection with their commercial activities are required by law to license the music they are broadcasting through a public performance license. This is almost always true even if such music is offered only as background music or as an otherwise subtle enhancement of the business ambiance.

Most of the music that is commonly played live or through the radio is held by a music licensing company ("MLC"), such as the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and the Society of European Stage Authors and Composers (SESAC). Most major songwriters and publishers license their music to a MLC so they can be relieved of the burden of having to constantly police the use of their music and calculate and recoup fees related to the licensing of their music. Each MLC then monitors the commercial use of each of the songs it holds and ensures that such commercial use has been properly licensed and paid for by the end-user. MLCs employ field agents to monitor the commercial use of their music at regional and local events, such as festivals and small concerts, to ensure that operators of large and small events, alike, pay the required licensing fees.

Of course, individuals who buy compact discs or download music have the right to enjoy such music for their personal use without the requirement of such licensing. However, the theory holds that commercial enterprises, even if offering such music as background music, benefit monetarily from the use of that music. Thus, the original rights-holders of such music should receive a portion of the revenue that the commercial enterprise reaps as a result of broadcasting such music, even if the use of such music is just a minor factor in the commercial success of the business.

How Do Public Performance Licenses Work?

Public Performance Licenses are normally granted for a period of one year and the fees for such licenses are generally based on factors such as ticket sales for live performances or audience size and frequency with which the music is broadcast for businesses such as radio stations and restaurants. For example, an owner of a small bar offering infrequent live performances may opt to purchase a separate license for each public performance. Conversely, an owner of a radio station, which regularly plays a wide variety of songs, will likely opt to purchase a blanket license. A blanket license allows a licensee to make a one-time payment for the licensing of all of the music played by it for the entire year, rather than being burdened by sorting out the licensing issues on a per-song or per-performance basis. Each MLC offers numerous licensing forms so that licensing fees can be calculated appropriately regardless of the circumstances in which the music is broadcast.

Who Bears The Burden Of Acquiring the Public Performance License?

Much of the confusion behind the licensing of publicly broadcast music lies in the question of who is responsible for obtaining the public performance license in the case of a live performance. Too often, because of this confusion, unsuspecting small business owners, such as bar and restaurant owners and owners of farms, which specialize in "agri-tainment", overlook whether such fees have actually been paid. This can be a costly mistake. If business owners are caught offering such public performances of music and have not paid the proper licensing fees, they are often forced to pay thousands, sometimes tens of thousands in back fees, penalties and, potentially, attorneys' fees.

Although the MLCs often pursue the venue hosts for back fees, the law does not specifically delineate who bears the burden of licensing the music. While it might seem commonsensical to many that the band actually performing the music, and not the business owner who simply hired the band, has the burden to pay the licensing fees, the case law states that "it has long been held that one may be liable for copyright infringement even though he has not himself performed the protected composition."1 From this statement, it is clear that the band playing the music is not the only party who may be found liable for copyright infringement as a result of performing such music without the appropriate license. The business owner, too, may be liable.

Further, the Second Circuit has concluded that "one may be vicariously liable if he has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities."2 This is the case "even in the absence of actual knowledge that the copyright monopoly is being impaired."3 Thus, it seems clear that anyone who has a direct financial interest in such a public performance and who, has the ability to supervise the infringing activity, regardless of actual knowledge of the infringement – i.e. venue owners, event organizers, production companies, and, potentially, band managers and booking agents – are responsible for ensuring that proper licenses have been obtained.

Despite the wide net that the law casts on those who are even tangentially involved with such public performances, typically, in practice, it is the venue owner who pays such fees; as ultimately it is the party most likely to benefit directly from offering such public performances. Regardless of which party actually obtains the appropriate license, all other parties involved in the performance should ensure that this task has been properly performed.

For that reason, unless the issue is already addressed as a provision in another agreement between the parties, the parties involved with the performance, which most often includes the venue owner, the performer and/or the performer's manager, should enter into a formal agreement in which they clearly delineate who is responsible for ensuring that the proper licensing is in place, and who will be responsible for the cost of such licensing. This agreement may also include indemnification and liability provisions, which protect the parties involved in the event they are damaged by the non-performance of the other parties responsible for obtaining such licensing.

Conclusion

Broadcasting music, whether live or through the radio, can be of great financial benefit to businesses, both large and small. However, broadcasting music in connection with one's commercial activities does not come without risk. Business owners offering public performances of music should ensure that the necessary licenses have been acquired, allowing them to broadcast such music publicly.

Businesses offering live performances of music should keep careful records of the songs played by the performers. Additionally, constructing a properly drafted agreement between the business and any third parties involved with the public performance offering, addressing which party bears the burden of acquiring the necessary licenses, among other issues, is a must. Businesses should contact an attorney knowledgeable in the field of music licensing for additional guidance with respect to the public performance of music in their business.

Footnotes

1. Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1161-62 (2d Cir. 1971).

2. Id. at 1162.

3. Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304, 307 (2d Cir. 1963).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.