Is That Hold Music Legal?

 By Mike Wilson, J.D.

December 2006/January 2007

Music so permeates our culture that we take for granted the right to play it.  However, performing rights organizations like ASCAP, SESAC, and BMI do not take it for granted.  They know, and so should you, that a licensing agreement is required to legally play copyrighted works.

It does not matter if you own the CD that is playing for your callers on hold.  It does not matter that it is really the radio station that is broadcasting the songs you have piped in as your "on hold" music.  It does not even matter if you are a non-profit organization.  Licensing is required.  If you think music copyrights are a non-issue, all you need to do is look at the fervor over Napster.

Exemptions are limited.  Music during church services or in face-to-face teaching in a classroom does not require a license.  There are some other narrowly defined exemptions in Section 110(5) of the Copyright Act.  Playing a TV or radio in public may be okay in certain circumstances.  For example, if there is no charge and the radio or TV are of the "kind commonly used in homes" and there's no retransmission to the general public, it is permissible.  In addition,  there are other restrictions on the size and type of establishment, the number of speakers or TVs in each room, and so on.  Unless you fall within an exemption, licensing will be required or you will be guilty of copyright infringement.  Other countries, of course, have copyright laws as well and penalties for violating them.

What If You Fail To Get A License?  If you fail to license the music you are playing, perhaps nothing will happen.  Due to the difficulty of monitoring the millions of performances of copyrighted music that take place every day, perhaps you will not be caught.  However, increasingly representatives from ASCAP, BMI, and SESAC are contacting businesses that use music to determine whether the music has been licensed.  Even more worrisome is that a disgruntled employee or aggressive competitor might "report" you to these organizations.

Instead of asking whether you will be caught, ask what can be the consequences?  Actual damages as well as statutory damages of up to $20,000 can be awarded for each copyrighted song performed without a license.  The damages can be up to $100,000 if the infringement is willful.  Those who willfully infringe on a copyright for commercial advantage or private gain can be fined up to $25,000, be sentenced to jail time of up to a year, or both.

Obtaining a License: There are many different types of licensing agreements intended to serve different needs.  You may contact the performance rights organizations yourself to see what is offered.  ASCAP, SESAC, and BMI license performance rights for most of the music copyright holders in the United States.  Also, a music clearance and licensing company can help you determine your licensing needs and assist in the process of obtaining the kind of license you need.  In addition, some professional and business associations may negotiate a group rate with one or more of the performance rights organizations.  It is common for businesses to license the right to use all of the works represented by a particular performance rights organization like BMI for one flat annual fee instead of attempting to license individual songs.

The cost of licensing is not prohibitive and is certainly worth the money in light of the potential downside of steep fines and damages.  An easy solution is to contact a company that provides music-on-hold or on-hold programs.  Generally, they will handle the licensing for you.  This will be included in the cost of their services.

Whichever method you select, be sure to obtain documentation so that you can prove your on-hold music is licensed in the event ASCAP, SESAC, or BMI ever come knocking on the door of your call center.

Mike Wilson is an attorney and author.  He teaches at Sullivan University in Lexington, KY.

[ASCAP is the American Society of Composers, Authors and Publishers; SESAC is the Society of European Authors and Composers; BMI is Broadcast Music, Inc.]

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