Yesterday, I noted a news story about a bar that stopped hosting live music when it was hit with a lawsuit by BMI because it had not paid royalties for its use of music.  The issue of music in bars and restaurants also came up in a continuing legal education seminar on music licensing that I moderated the week before last.  Given that I have not written on this topic in some time, I thought that it was worth a reminder that retail outlets, including bars and restaurants, have to pay music royalties to ASCAP, BMI, SESAC and perhaps GMR for the performance of music in their venues, except if they fit within very detailed exceptions that allow for certain businesses to avoid those payments.

We wrote an article here that goes into detail on the exceptions.  Basically, for very small businesses, their employees can use a single device of the type used in a home to play music.  This exception was designed to allow businesses to allow their employees to have personal audio devices to entertain themselves.  So that portable radio on the counter of the dry cleaner or at the secretary’s desk can play music without paying royalties.  For larger businesses there is a different exception that allows them to avoid liability but only if they meet very specific rules. 

This exception is based on the physical size of the business and the number of broadcast receivers that it uses.  It applies only when the business plays an FCC licensed radio or TV station (or cable or satellite TV programming) where the originator of the programming has paid the appropriate fees. The business that takes advantage of this exception can’t charge an admission fee.  And the business must fit into one of these categories:

  • It has less than 2,000 gross square feet (excluding parking – but the parking area must be just used for parking – so the area around the gas pumps or other actively used outside areas would probably count toward the 2,000 square feet) or, for “food service or drinking establishments” (bars and restaurants), the square footage is less than 3750 gross square feet (excluding parking as long as the parking is only used for parking, e.g. it does not become a patio during good weather);
  • Or, if the business has more than the square footage set out above, then:
    1. If the business only plays the radio, it can have no more than 6 total speakers, no more than 4 of which can be in one room (or adjoining outdoor space)
    2. If the business plays TV, it can have no more than 4 TVs, none bigger than 55 inches (diagonal screen size), and no more than one in any room (and there can’t be more than 6 speakers providing the TV audio, with no more than 4 in any one room)

Note that this exception is not limited to consumer-type radios, but the business can only play FCC licensed radio or TV stations (cable and satellite TV count as TV too).  No CDs, no hooking up to an iTunes library and no streaming services.  If a business plays any of these other services, or features live music, then they must get public performance licenses.

For even more detail on these issues, see the article that I co-authored in the ABA Intellectual Property Division’s magazine Landslide that is available here.  Avoid trouble – get the licenses that you need.