Almost all businesses, such as radio stations, restaurants, spas and concert venues that publicly broadcast music through a radio or other electronic means or offer live public performances of music in connection with their commercial activities are required to obtain a public performance license (PPL) for the music they are broadcasting.
Most of the music that is commonly played live or through the radio is held by a music licensing company (MLC), such as ASCAP, BMI, and SESAC. Most major songwriters and publishers license their music to a MLC so they can be relieved of the burden of having to police the use of their music and calculate and recoup fees related to the playing 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 by the end-user. Some MLCs even employ field agents to monitor the commercial use of their music at regional and local events.
Individuals who buy 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, profit 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.
How Do Public Performance Licenses Work?
PPLs are normally secured either for a set amount of time or on a per performance basis. Fees for PPLs are generally based on factors such as ticket sales for live performances, frequency with which the music is played, and audience size in the case of PPLs for businesses such as radio stations. 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 may opt to purchase a blanket license, which allows a licensee to make a one-time payment for the licensing of all of the music played by it for the year.
Who Bears the Burden of Acquiring the License?
Too often, small business owners, such as bar and restaurant owners, overlook the issue of licensing when they offer music to their patrons. This can be a costly mistake. If business owners are caught offering 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 in addition to 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 reasonable to many that the band actually performing the music should have 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.”
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.” This is the case “even in the absence of actual knowledge that the copyright monopoly is being impaired.”
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.
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.
Henry “Hank” Abromson is an associate attorney with Severn, O’Connor & Kresslein, P.A., located in Frederick, Maryland. He practices in the areas of Copyright, Trademark, Sports & Entertainment, Corporate, Business and Cyber Law.