Have you ever listened to a song on the radio, on Spotify, or in a commercial on TV and wondered who wrote it and how they’re getting paid? While there are different types of payments artists can receive, one of the most important types is performance royalties. These are royalties that are generated by an artist’s music being played in a public environment, which includes: radio, TV broadcasts, streaming, and performances in public venues. These performances are tracked, and the royalties are then collected by performance rights organizations (also referred to as PROs and collection societies). There are dozens of these organizations around the world, but the two biggest in the US are BMI (Broadcast Music, Inc.) and ASCAP (American Society of Composers, Authors, and Publishers). Some BMI clients include Lady Gaga, Taylor Swift, Ed Sheeran, and John Williams. Some ASCAP clients include Beyoncé, Katy Perry, and Justin Timberlake.
Any time you tune in to the radio or listen to a song privately on Spotify, a small royalty is generated, which will eventually be paid out to the song’s writer and publisher. However, if you want to take that same radio station or Spotify playlist and play it publicly in your place of business, that is considered a public performance and legally requires special licensing to ensure that artists are paid fairly. A public performance is when any track represented by these agencies is played outside of a private circle of friends or family. If you don’t have a license and play this music publicly, it is considered copyright infringement, and you could be fined up to one thousand dollars per track played at your business.
BMI vs. ASCAP: What’s the Difference?
From an artist’s perspective, there isn’t much difference between ASCAP and BMI. Various artists may prefer one over the other, and ASCAP has a one-time fifty dollar registration fee while registration with BMI is free. Other than that, ASCAP and BMI function similarly, collecting royalties on behalf of their artists. From the perspective of someone who wants to use music in their business, however, there are big differences. The first difference is the artists represented by each collection society. Since Taylor Swift and Katy Perry don’t belong to the same collection society, a business would need a license with both BMI and ASCAP to play music by both artists. The second difference is the cost.
Generally, the rates for public-performance licenses are based on two factors:
- The manner in which music is performed (e.g., a live performance or an audio recording)
- The size of the establishment or potential audience for the music
A license to play recorded background music in your establishment will cost much less than the license to perform the same song live for a large audience. Even so, playing background music is still costly, reaching up to hundreds of dollars for each license.
ASCAP provides a rate schedule on their website to help determine how much a public-performance license will cost. Depending on the way the music is performed and the business type, these fees may range from a couple hundred to over a thousand dollars. The cost of licenses for recorded background music does not depend on the kind of business and instead has a fixed fee of hundreds of dollars per year per business or location.
The average business license with BMI ranges from $250 to $400 per year, but larger businesses might pay closer to $2,000 per year. To get a specific quote for your business, you would need to contact BMI directly.
A Real Life Example
Between a BMI and ASCAP license, the cost of playing music in your business can quickly escalate and become enormous. One couple-owned coffee shop was forced to permanently close because the annual cost of an ASCAP license (six hundred dollars) and a BMI license (five hundred dollars) was too much for their small business to afford. Luckily, SoundMachine provides solutions that allow businesses to play recorded background music for a more affordable and reasonable price.
SoundMachine to the Rescue
SoundMachine allows you to play recorded music from both ASCAP and BMI without having to pay a high fee to each individual PRO. For $26.95 per month, you can have access to all of ASCAP’s and BMI’s catalogs in addition to other PROs such as SESAC, which represents Adele and other artists. By subscribing to SoundMachine, you won’t have to worry about setting up, managing, or paying individual contracts with multiple PROs. All you will have to do is sit back, let SoundMachine do the work for you, and save money. Sign up for a free trial here!