COVID-19 Changes How Office Owners Approach Music Licensing
By Jeffrey A. Tinker, partner, Bell Nunnally LLP
Amenities often play an outsized role in influencing companies’ decision on where to lease office space. In the not-so-distant past before COVID-19 came along, open, spacious common areas were the most desirable. The music played in those common areas could not only increase customer satisfaction, but also accentuate a building’s vibe and environment.
However, music from sound systems and televisions in public spaces like lobbies and elevators is subject to copyright licensing requirements. In general, a license from Performing Rights Organizations (PROs) is required for public performances of music from sources other than over-the-air radio (on a limited number of speakers) or subscription music services like Spotify Business, Apple Music for Business or Mood Media.
As businesses reopen, common areas are being modified or even removed in order to comply with government mandates and provide peace of mind to their customers. As common areas disappear, the public performance of music in those areas will also disappear. The following is a brief overview of the licensing requirements to keep in mind as you plan ahead.
Office Music 101
A PRO is an organization that grants, administers and enforces public performance licenses on behalf of its members — the songwriters and publishers that own the copyrights.
Rather than attempting to license their music to thousands of businesses, songwriters join a PRO to collect royalties on their behalf. Businesses pay an annual fee to the PRO for a “blanket license,” which gives them the right to an unlimited number of public performances of all the songs in the PRO’s repertory.
A PRO license allows access to a greater variety of music sources, but paying the annual fee may not make economic sense for a business with only limited music uses. Therefore, business owners and property managers need to establish music-usage guidelines that will not only maintain brand consistency, but also ensure compliance with licensing requirements. The PRO, in turn, distributes the fees, less operating expenses, to its members as royalties.
In the U.S., there are three main PROs that have been around since the early 1900s: Broadcast Music, Inc. (BMI), American Society of Composers, Authors, and Publishers (ASCAP) and Society of European Stage Authors and Composers (SESAC). A license from one of these PROs can range from a few hundred dollars to several thousand dollars annually, depending on the size of the business and its music usage. For example, a mid-size apartment complex (350 units) with no live music would pay $1,384 to the three main PROs ($558 to SESAC, $448 to ASCAP, and $378 to BMI). If they wanted to have live music at some of their events, the annual fee would jump to $2,203.
However, if a business needs a license from one PRO, it likely needs one from all of the PROs because a songwriter can only be a member of one PRO at a time, and each PRO can only license its own members’ songs. Recently, a fourth PRO, Global Music Rights (GMR), has joined the mix. Although GMR is a legitimate PRO, its repertoire is limited (33,000 songs vs. BMI’s 14 million) and there are ways to avoid playing the songs in its library.
The PROs enforce their rights by having representatives travel the country looking for businesses playing unlicensed music and then demanding that they pay for a license. Although the PROs are reluctant to sue, once an investigator observes infringing activity, continuing without a license is not a wise option because when the PROs sue, they rarely lose. Penalties for copyright infringement can be high, with damages between $750 to $30,000 for each musical composition used without authorization. In addition, courts routinely award enhanced damages and attorneys’ fees to the PROs if the infringement was willful.
The Service Today
As times have changed, so too have the investigative methods used by the PROs, which now scour the internet for infringers. In particular, they look at the amenities businesses advertise online to attract customers. So, if your amenities have changed to address COVID-19, be sure your website reflects those changes.
For example, most apartment communities have websites that include pictures of large screen TVs and descriptions of the amenities they offer, like yoga classes. The PROs need only visit those websites to gather evidence of music uses that may require a license.
As social media has become more and more prevalent, the PROs have also begun looking at Twitter accounts and Facebook pages for examples of public performances. In addition to using social media to advertise their amenities, businesses often use it to make announcements about upcoming events, such as Christmas parties, and then post pictures of the event afterwards. Even if a business doesn’t use social media, it is highly likely attendees will post pictures on their own social media accounts. Armed with nothing more than social media posts depicting, for example, photos of a DJ at a property-sponsored event, the PROs have all the evidence they need to confront that business about its need for a public performance license.
Generally speaking, while in most instances businesses that want to publicly perform music need to obtain a license, there are some exemptions. For example, if the only source of music at a business is from audio-only music channels or a business subscription music service, a license may not be required.
Also, businesses of a certain size with no admission fee that use music only from television, radio, cable or satellite may not need a license. For a larger business, a license may not be needed if it has no more than six speakers, with no more than four in any one room. The same applies if the business has no more than four TVs, with no more than one TV in each room and no TV bigger than 55 inches.
To avoid potentially costly penalties, businesses should obtain the necessary licenses or implement policies to avoid needing a license. On a case-by-case basis, potential factors a business will need to consider include: the location where music is being played; the source of the music (live band, radio, CD, mp3, television, streaming, etc.); the device playing the music; and the audience or potential audience hearing the music.
Although there are some straightforward rules for businesses to consider as they assess their music uses and develop solutions for compliance, copyright law is complex and often confusing. Further muddying the situation, some issues have not been fully addressed by the courts and there are rules that apply to one industry that may not apply to others.
Copyright law and music licensing are complicated topics. The issues discussed here include only some of the many issues that can arise in connection with music used by a business. This paper provides general information for educational purposes only, not legal advice.
Jeffrey A. Tinker is a partner with Bell Nunnally in Dallas and a member of its intellectual property practice. He can be reached at [email protected], or via the firm’s website: http://www.bellnunnally.com.