Playing music in a restaurant is an important element of the guest experience, but it requires navigating a complex system of intellectual property rights and licensing fees. Understanding the cost involves recognizing the legal requirement to compensate music creators for the public use of their work and identifying the organizations that collect these payments. This process is necessary whether the music is streamed, played from a radio, or performed live. The total annual expense depends on several factors specific to each location.
The Legal Necessity of Public Performance Licensing
The requirement to obtain permission to play music in a commercial setting stems from the Public Performance Right, one of the exclusive rights granted to copyright owners under the U.S. Copyright Act (Title 17, Section 106). This federal law gives the creator of a musical work the sole authority to control and authorize its public performance.
When a restaurant plays recorded or live music, it is considered a “public performance” because the establishment is open to the public where people outside a normal family or social circle are gathered. Playing music, regardless of the source (streaming, radio, TV, or live band), is viewed as using copyrighted material to enhance the business environment. Even if the music was purchased legally for personal use, playing it for patrons still constitutes a public performance requiring a commercial license. The legal obligation rests on the restaurant owner to secure this license.
Identifying the Key Licensing Organizations
To legally play a wide range of copyrighted music, a restaurant owner must secure licenses from Performing Rights Organizations (PROs). These organizations act as intermediaries, representing songwriters and publishers by collecting licensing fees and distributing royalties for public performances.
The four major PROs in the United States are the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), the Society of European Stage Authors and Composers (SESAC), and Global Music Rights (GMR). ASCAP and BMI represent the largest catalogs. Because a restaurant cannot know which PRO represents every song on a playlist, comprehensive compliance requires obtaining a separate blanket license from each of these four organizations to cover the vast majority of music.
Variables That Determine Music Licensing Fees
The total cost of music licensing is not a flat fee but is determined by operational factors specific to the restaurant that PROs use to calculate annual rates. The primary variable is the size of the establishment, typically measured by square footage or seating capacity. Larger venues generally face higher fees because the music is disseminated to a greater number of people.
The manner in which music is used is another factor influencing the fee structure. Playing recorded background music (via speakers or a juke box) is priced differently than hosting live music (a band, DJ, or karaoke). PROs also consider whether the music is solely for background ambiance or if it is a feature intended for dancing or entertainment. The number of days per week music is offered and whether a cover charge is applied also factor into the final annual license cost.
Typical Annual Cost Ranges and Calculation Examples
The annual cost of music licensing for a restaurant can vary significantly, ranging from a few hundred dollars to several thousand dollars. For a very small cafe that only plays recorded background music, the fee from a single PRO might be around $300 to $400 per year, but this amount must be paid to multiple organizations. A small to medium-sized restaurant, operating with licenses from ASCAP, BMI, and SESAC, might incur a collective annual expense between $1,000 and $1,500.
A larger restaurant that features live bands or DJs multiple nights a week will face substantially higher fees due to the increased scope of music use. For example, a medium-to-large venue could pay $400 to $500 annually to each of the four PROs, resulting in a total annual outlay of $1,600 to $2,000 or more.
Alternative Licensing Solutions for Restaurants
Instead of managing individual blanket licenses from multiple Performing Rights Organizations, many restaurants opt for specialized commercial streaming services. Companies like Soundtrack Your Brand, Mood Media, and Pandora CloudCover offer business-specific music solutions. These services act as a single point of contact by bundling the required public performance licenses into a monthly or annual subscription fee.
The advantage of these bundled solutions is the simplification of compliance, as they handle negotiations and payments to the PROs and other rights holders on behalf of the restaurant. These services provide a curated and fully licensed catalog of music cleared for commercial use, removing the administrative burden. Satellite radio for business is a similar alternative that includes the necessary licensing in its subscription.
Financial and Legal Consequences of Non-Compliance
Operating a restaurant that plays copyrighted music without the proper licenses exposes the business to financial and legal risk. Performing Rights Organizations actively monitor businesses for compliance. If an establishment is found to be playing unlicensed music, the PROs often initiate civil lawsuits resulting in substantial financial penalties that far exceed the cost of the annual licenses.
The U.S. Copyright Act allows copyright holders to seek statutory damages for infringement, which can range from $750 up to $30,000 for each song played without permission. If the court determines the infringement was willful, this penalty can escalate to $150,000 per infringed work. Past cases have resulted in judgments demonstrating that the cost of non-compliance is a far greater financial burden than paying the required licensing fees.