We sat down with Toshi Takishita, a corporate technology lawyer at Caravel Law, to discuss what you need to know about obtaining a license to play music in your establishment.
Filling your bar, restaurant, or retail shop with the right music is crucial for setting the mood and creating a welcoming atmosphere for your customers.
But a recent survey found that four out of five small businesses in Canada had no idea they had to pay for rights to perform music publicly.
In fact, in most cases owners of brick-and-mortar hospitality, restaurants, grocery stores and other retail outlets must have a license in order to play music legally in their business.
Music creators, such as composers, lyric writers, and performing artists, have copyright on their work and are due royalties when their works are performed and used by others.
And when businesses get caught without a license (or without the correct license) for the music they play, they put themselves at legal and financial risk.
How can business owners ensure they’re legally protected and still play music to help set the mood in their establishment? We’ve taken a look at what you need to know to protect your business while helping to compensate artists fairly.
In Canada, copyright protects literary, artistic, dramatic or musical works.
This copyright entitles artists – like music creators – to receive compensation for their work through royalties paid out through music licensing fees.
Who needs to get a license to play music?
Canadian law states that if you publicly play music as part of your business and if the public, your customers, hear that music, you are legally required to obtain a licence from the rights holders of that work.
Can I use a music streaming service or downloaded music and avoid paying a music license fee?
In most cases, no. Some music streaming services, like Spotify cannot be used for commercial purposes. However, there are third-party services that will manage music licensing for your establishment, like Soundtrack Your Brand. In most other cases, you would need to get the appropropriate collective license.
Who collects the royalties?
In Canada, there are two main performing rights organizations (PROs) that have the authority to collect tariffs on behalf of the people who hold a copyright to the music played to the public.
- SOCAN, which acts on behalf of composers, authors and publishers; and
- Re:Sound, which acts on behalf of performing artists and record companies.
These companies don’t just represent artists living and working in Canada, they represent artists living all across the globe.
When music is played, it is the responsibility of these PROs to collect the fees and distribute it to the person (or people) who hold the copyright, no matter where that person was born or currently lives.
How are the licensing fees determined?
The Copyright Board of Canada sets the fees, and the above agencies collect and remit the fees to the music creators.
Fees are calculated using a formula based on several factors for each business, including the number of days of music use and one of the following factors, the number of admissions/tickets sold, the capacity of the venue, or the size of the venue area, in square feet/meters.
How do you acquire a music license for your business?
In the past, it was somewhat complicated to find out exactly what kind of license you needed, from which agency, and exactly how much your tariff (fee) would be.
In 2019, Re:Sound and SOCAN launched Entandem, a joint licensing portal to simplify the licensing process and help business owners play music in their establishment legally and ethically, ensuring that those who made the music are compensated.
Through Entandem, business owners receive both Re:Sound and SOCAN licenses, with a single payment through one organization.
What music don’t I need a license for?
Only artists whose songs are in the repertoire of either SOCAN or Re:Sound can receive royalties from those companies. If a small, local band is playing at your establishment and they haven’t signed up with a licensing body, then you may not be required to get a collective licence. But there can be other factors, so if you have any questions, get legal advice.
There are also exceptions involving radio, according to the Retail Council of Canada. If you choose to play radio in your business through a traditional terrestrial (not digital) radio receiver, you could potentially avoid paying fees.
However, if you do choose to play the radio in your establishment, it’s worth noting you have no control over the song selection, commercials played, the banter between hosts and the quality of the audio.
What happens if you need a music license for your business and you don’t have one?
PROs often conduct license inspections to ensure businesses have the correct license for any music they’re playing. Inspectors can simply walk into your place of business, review their notes and determine whether you violate copyright law or not.
According to the Government of Canada website, fees for music copyright violation can range between $100 and $20,000, depending on various factors, including the business type, whether you knew about the violation, and more.
In the end, it is up to the court to determine what fee is just for the violation.
Most businesses won’t be hit with legal action right away, as PROs generally provide written warnings prior to filing a lawsuit.
But like anything in business, it’s always better to be prepared. So rather than risk receiving a notice, simply visit Entandem and ensure you have the right license for your organization.
Need legal help for your new or small business? Caravel Law is an alternative legal firm with over 70 qualified and experienced lawyers to help support your legal needs. Get in touch with our team to find out more.
The information provided in this article is not intended to be legal advice. Many factors unknown to us may affect the applicability of this content to your particular circumstances.