Posted on 01.06.2016.
More and more people recognise the importance and influence of background music in retail and gastronomy. At the same time, these are challenging times financially. The result is that many entrepreneurs turn to home-made solutions for their instore music. And why should they not? Nothing is as easy as creating a playlist in Spotify or iTunes and hooking it up to a sound system, right?
The problem is that playing music in a retail or gastronomy venue this way is illegal. Even when you have a Spotify premium account or play music that you have payed for and legally downloaded from iTunes. In fact, even playing your old CD’s is not allowed.
The problem lies with the mechanical rights. Mechanical rights are payed to allow someone to create and distribute copies of the music. (For my younger readers: copying music used to be a mechanical process, hence the term ‘mechanical rights’.) This is a costly affair and therefore music distributors only cover these rights for the intended audience; you.
When you play this music in a shop, you make commercial use of the works and distribute them to a larger audience. The mechanical rights that were payed for this music do not cover such usage.
I have contacted both Spotify and the Dutch rights handling organization Buma/Stemra but they both confirmed that there is no legal way to use Spotify in a commercial space. You cannot strike your own deal with the rights handling organizations to buy off the mechanical rights. So put simply: until Spotify decide to cover mechanical rights for both personal and commercial use, there is no way you can legally play music from a Spotify system in your retail or gastronomy enterprise.
One solution is to buy your music from a specialized retail music supplier. They cover the mechanical rights for commercial use and you can therefore play their music legally. Note that this can be the exact same music. Lady Gaga via Spotify = illegal. Lady Gaga via an instore music supplier = legal.
Mechanical rights are not the only rights you will be dealing with. You also face copyrights and performing rights when playing instore music. These dues cover the rights of the composer(s), producer, and musicians. Varying upon the country in which you are situated these might be calculated based upon the floor surface of your venue and the number of employees you have working there. These rights also apply to a simple radio you have playing in the background.
Now you might be thinking: “I have been playing music from Spotify on my phone in my shop for years and I have never payed any of these rights.” Legally, you are obligated to report your music usage to the rights handling organizations in your country. They will then charge you for your use.
So what if you don’t? Most rights handling organizations are quite active when it comes to auditing shops, bars and restaurants. When they discover you are playing music illegally you might be fined or charged an estimate of the dues you have evaded. This can be quite costly if they suspect you have been doing this for a long time.
The philosophy behind this is that when you play music in a commercial venue, you are using it to create a better experience for your personnel or clients. You are gaining from it, and therefore its creators should get a fair share. Whether the share is in fact fair, is a totally different debate.
When you buy music from an instore music supplier you will usually pay a subscription fee per month. Besides a custom, branded music channel this fee usually includes the mechanical rights. Since the copyrights and performing rights are based upon your specific venue you will have to take care of these yourself. When all these rights are properly taken care of, you can enjoy fully legal music in your commercial venue.
Another solution is to buy rights included or rights free music. This is music that is not registered with the rights handling authorities and you can therefore negotiate a fee with the owner. Many instore music providers will also offer this kind of music and it results in much lower costs, depending on the size of your venue. You will not pay any mechanical rights, copyrights or performing rights. Just the fee you agree with the supplier. And this is fully legal.
The downside is that this music is usually completely unknown. Michael Jackson, for instance, is registered with the rights handling organizations and you will therefore not be able to play his music rights included. Only music that is not registered can be offered this way. This means, no recognition, no hits. Whether this is a problem for your organization is another discussion, but it is a crucial factor to think about.
Although many rights included music libraries are of very poor quality, some better alternatives are emerging these days. Be sure to listen carefully before buying anything since quality varies strongly.
Effectively, you are not allowed to play music that was not intended for commercial use in your shop, bar or restaurant. So unfortunately, you cannot bring your personal music collection to work.
Thanks to Mytrak, not only can you play your favourite songs in house, but you can interact with you clients and generate revenue at the same time!