Music in Restaurants: Licensing Made Simple

The ins and outs of what music you can and can’t play and why in your place of business can be confusing. Maybe you really enjoy sorting through convoluted legalese in your spare time. But if not, here are some simple, definitive answers to all your questions regarding how to play music in your restaurant.

Can you use Spotify at your restaurant? No. Streaming apps such as Spotify, Tidal, Apple Music, and Youtube are only for personal, non-commercial use. That means that it’s illegal to play music from these or any similar platforms at your restaurant (or bar, store, hotel, etc.) during hours of operation.

What about if you own your music? If you buy all your music (good for you), you can play it at your restaurant. That said, if you do that, you’re essentially DJing. If you have DJs, cover bands, or are playing the music yourself, you do need to pay a public performance license. This can be done by paying performing rights organizations (PROs) — ASCAP, SESAC, and BMI — directly. How much it costs depends on the size and nature of your venue, but it’s typically somewhere between $1,000 and $5,000 USD a year. Public performance licenses do not cover streaming.

Why do these laws exist and what are PROs? Copywright, licensing and publishing laws exist to protect peoples intellectual property and compensate them when their intellectual property is used in a commercial setting. If you run a restaurant for a profit and you play music to enhance the dining experience, every artist whose music you play is working for you in a very tiny way and should be compensated. If you don’t compensate them, that’s basically copyright infringement. Of course, you can’t run around sending 2 cents to Beyonce here and a penny to the estate of Miles Davis there, so that’s where performing rights organizations come in. Performing rights organizations work with artists, labels and publishers to negotiate licenses for public performances including live concerts, TV, and of course, the music playing at your restaurant.

What are the penalties for illegally playing music? Fines are accumulated per song that is illegally played and range from $750 — $150,000 per song played depending on the amount of people that hear the song at a time. With that in mind, the overall fine ranges but normally you’re looking at somewhere between $15,000 and $50,000 for smaller restaurants. Larger restaurants can face fines upwards of $1,000,000.

Will I get caught? It’s hard to say. Chances are, if you’re a very small restaurant or bar that streams music from Spotify or Apple Music you’ll probably be OK. But the bigger you get, the higher the risk and the larger the penalty.

How could I get caught? Performance rights organizations (PROs) have agents that go to bars and restaurants, identify songs played, and figure out if the venue has the proper licenses to play them. If not, the venue will be served with a lawsuit and probably be forced to pay. Most of these cases are settled out of court, but a recent example in New Jersey saw a restaurant pay $24,000 total for four songs that they didn’t have the rights to play during service. I’ve heard of at least two cases where a performance venue and a hotel had to pay upwards of a million dollars in penalties.

What are your options? If you have cover bands or DJs or own a Japanese Record Bar (very cool), pay for public performance licenses through the three major PROs. Consider this like your taxes — they just need to be paid. If you don’t have live music or DJs, you don’t need to pay a public performance license, but you should sign up for a music service for businesses. All licenses and the associated costs will be baked in to the monthly costs. Prices for these services range from $15 — $100 a month. The very cheapest of these services have a series of pre-made thematic playlists to choose from. The higher end ones will build the playlists and schedule them specifically to your needs. As a consultant for the best regarded high end curation service, I’m admittedly partial to the latter, but it’s worth doing your own research.

To learn more about how to build the perfect playlist for your restaurant, check this out, or feel free to drop me a line at Dash@Musicstyling.com.