Does your Business Use Music?
Many if not most businesses broadcast music, or otherwise use music in conjunction with their services, marketing, and products. This following blog post will introduce some of the music licensing requirements that a small business may run into.
It’s general knowledge that if a business incorporates music into an advertisement, website, or a product, they require permission from the copyright holder of the song. In these scenarios a synchronization licence would be required. Most often businesses will have to negotiate directly with the copyright holder of the song in order to receive a synchronization license. Often times, this will be a record label, or independent artist. This can prove difficult for small businesses, as they will need to determine who the copyright holder is, and will then have to attempt to contact and negotiate licensing rates with the copyright holder. This may make it nearly impossible for a small business to get a synchronisation licences for a well known song.
There exists music licencing services that act on behalf of groups of artists and rights holders. This can be a good way for small businesses to license music quickly and effectively. A Google search for, “music licensing services” will turn up many results for these sort of licencing services. However, it’s important to ensure that the chosen service is reputable.
For more information: musiccanada.com/resources/licensing/
If the reproduction of music is an essential part of your business, for example you are hoping to be the next record label or music streaming service, there will be other considerations that will not be discussed in this blog post. To learn more on this topic, a good starting point is connectmusic.ca.
For more information: connectmusic.ca
Public Performance and Broadcast
Small business owners often don’t realize that any public use of music in connection with their business requires some form of licensing, as a royalties need to be paid to the rights holders. A recent leger poll surveyed 510 small business in Canada. This poll defined small business as those with 1 to 9 employees. The poll found that 71% of respondents consider music to be an essential part of their service, yet only 11% are licensing music. This suggest that a significant portion of Canadian small businesses are infringing on copyright, and opening themselves up to possible legal action. Simply having purchased a cd, or using a music streaming service does not amount to compliance with the Copyright Act. Section 19 of the Canadian Copyright Act deals with renumeration, it applies to Canadian and non-Canadian sound recordings. It serves the purpose of mandating the proper renumeration of royalties to music rights holders.
For a business to publicly broadcasts music, or use live music to better their clients’ experience, they must ensure that they are paying a royalty to the rights holders.
The following situations provide examples of situations where a business is required to remit a royalty.
SOCAN: SOCAN represents songwriters, composer and music publishers. SOCAN sets tariffs for business, which once paid allow for the issuance of a licence. Tariff rates are set based on the purpose for which the business uses music, as well as based on an estimate of the quantity of people that will hear the music. Some business may need to pay for multiple tariffs to properly comply. For example, a café will need a licence that covers sound recordings that it plays through its stereo, and live music in the café. The licence will be based on the price of two different tariffs.
RE-SOUND: RE:SOUND acts on behalf of performing artists and recording companies. A business will need a licence from both SOCAN and RE:SOUND when broadcasting music. For live music, only a SOCAN License is required. RE-SOUND uses a tariff system similar to SOCAN to price licenses.
Entandem: Entandem is a joint venture between RE:SOUND and SOCAN. It allows Canadian business to get all broadcast and live music licenses from the same place.
Satellite Radio: Some businesses that require background music may be able to use services that pay the royalties on their behalf. Companies including SiriusXM and Stingray have business plans that can be used instead of getting a licence.
Graham Richardson is a member of the BLG Business Venture Clinic and is a second-year law student at the Faculty of Law, University of Calgary.
Sources and Further Information
Licensing Music – Who’s Who
SOCAN, Re:Sound and CONNECT – Different rights, different collectives
Copyright Act (R.S.C., 1985, c. C-42)
Copyright in Performers’ Performances, Sound Recordings and Communication Signals and Moral Rights in Performers’ Performances (continued)
Blog posts are by students at the Business Venture Clinic. Student bios appear under each post.