How Music Licensing Works

If you own a radio station or a restaurant and you want to broadcast or play music, what you need are public performance rights-- the right to play music that the general public will hear in one way or another. Obviously, if you own a radio station playing 300 or 400 songs every day, you would go insane if you had to obtain public performance writes from every label and publisher. Therefore, public performance rights licensing is now handled by two very large companies named ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music Incorporated) that simplify the process. Each one handles a catalog of about 4,000,000 songs.

A radio station will typically purchase from ASCAP and BMI what are called blanket licenses to broadcast music. A blanket license lets the station play anything it likes throughout the year. ASCAP and BMI decide how to divide up the money among all the rights owners.

Any establishment that wants to play music that will be heard by the general public needs a license as well. If you go to the Forms section of the BMI Web site, you can find a list of dozens of forms to cover every different type of establishment that you can imagine.

Let's consider this example -- a skating rink that wants to play music for its skating patrons needs to fill out this form. The schedule of fees is right on the form. If you own a rink that has 15,000 square feet of skating area and you charge customers $5.00 to skate, you own a class 6B establishment and you need to pay BMI $205 every year. You would need to do the same thing for ASCAP.

Technically, anyone performing music publicly anywhere has to pay:

If you do not pay and you get caught, you can be sued. Beware, the fines are pretty steep -- sometimes thousands of dollars.