Avoid Licensing Fees and Fines

By Tim Brown

Is the use of music on your telephone or in your establishment legal? It's nice to have good music playing when you place callers on hold, or when guests are waiting or shopping in your business, but getting that music from the wrong place can cost you thousands of dollars in fines. Yes, buisness owners do get fined for playing music without license or permission, and it's not cheap!

 

Music Licensing Guide

• On-hold music: All on-hold music (even a radio station) must be licensed. If you use an on-hold service, make sure that service is licensed.
• Background music services: Make sure the service is licensed. If not, your business will need a license.
• Recorded music: Playing recorded music requires a license. The only exceptions are for demonstration purposes (such as audio equipment sales).

Licensing Organizations Seek Fees, Fines for Background Music

You can't be sure whether you're next on the list to be called by a licensing organization, looking for fees. The following was reported by the Michigan Retailers Association (of which Easy On Hold is a member):“It looks like their tactic is to catch you off guard,” said Faye Hirt, owner of Faye’s at Mira, a women’s clothing store in Holland, Michigan that was called by BMI. Hirt informed BMI that she was exempt because her store played only radio music and fell within guidelines on the maximum number of speakers allowed. She later got into what she described as a testy conversation with a follow-up caller from BMI. “They didn’t seem to be looking out for our best interests,” she said.

In cases where a radio station is being "re-broadcast" on the music on hold system, fees and fines can be applied, regardless of how many speakers are in use in the facility. These laws apply to all commercial establishments, not only retailers.

Another Michigan Retail Association member, the owner of a furniture store who preferred not to be identified, said the employee who answered her store’s call from licensing organization BMI (Broadcast Music, Inc.) thought it was a radio station doing a survey. She also received a filled-out contract for a license that would have cost her business $1,957.50 per year. However, she said a license wasn’t necessary because she plays music only in the office, not on the sales floor. If the music had been carried on her telephone system, however, a license for using copyrighted material for hold music would have been required.

One more example of how dangerous unauthorized use of music can be. How would you like to be informed that you have been sued for $400,000 for playing music in your store? Larry Leigh, owner of Leigh’s and Mettie’s women’s clothing stores in Grand Rapids, found out the hard way about penalties for unlicensed music use. Several years ago, he received a letter from licensing organization ASCAP stating that he was violating copyright regulations by playing tapes and CDs in his stores. Unfortunately, Leigh got some bad advice from the business that installed his store stereo system, having assured assured him he didn’t need to worry. Two years later, he was sued by ASCAP for $400,000. His attorney informed him that his chances of winning the suit were not good, he settled out of court for a $5,000 fine.