Businesses Must Comply with Copyright Law When Playing Recorded Music

Muzak has become a generic term for the background music playing in elevators, offices, and waiting rooms. But Muzak started with a much bigger idea. Army officer and inventor George Owen Squier developed technology to transmit audio over electrical wires. In 1934, he envisioned music being piped into people’s homes without using radio, decades before streaming made that a reality. Based on this vision, Squier named his product Muzak by combining “music” with “Kodak.”

That home music service was never successful; people couldn’t be convinced to pay for something they could get on the radio for free. However, Muzak eventually found a market in hotels, restaurants, offices, and other businesses, where background music became part of the atmosphere.

Today, a business owner doesn’t need special wiring or a Muzak subscription to fill a restaurant, office lobby, apartment clubhouse, or store with music. A phone and a speaker combined with a music streaming service can provide that function. However, most personal subscriptions don’t give subscribers the right to play music whenever and wherever they want.

Consumer music streaming services’ terms of service typically don’t allow subscribers to play the music in a public setting or for commercial purposes. People who want to use music for commercial purposes or public performance must instead purchase a public performance license (PPL). This article discusses the types of copyrights in sound recordings and what businesses need to know before playing recorded music.

Copyright Rights in a Sound Recording

Digital music can involve two different copyrights – one in the musical composition being performed, and the other in the sound recording of the performance. Therefore, (except for public domain compositions) a business must have two licenses to perform the sound recording.

For example, consider Dolly Parton’s “I Will Always Love You.” Parton wrote and recorded the song in the 1970s, and Whitney Houston later recorded the version associated with the 1992 movie The Bodyguard. Both recordings involve Parton’s copyright as a songwriter. However, Parton’s and Houston’s sound recordings will have different copyrights. So, when a restaurant plays Houston singing “I Will Always Love You,” there are two different copyrights.

The situation becomes more complicated because songs and sound recordings have different public-performance rights under copyright law. Owners of copyrights in musical compositions generally have the exclusive right to perform those works publicly. But owners of sound recordings have a more limited public-performance right that applies to certain digital audio transmissions, but not to broadcast radio. An attorney familiar with music licensing can help a business identify the copyrights and licenses that apply to the specific way it plans to use recorded music.

A Recording of a Public Domain Song May Still Have Copyright Protection

A business may think it’s safe under copyright law if it plays only public domain music, but that’s not necessarily the case. Consider Carrie Underwood’s 2021 recording of “Amazing Grace” from her gospel album My Savior.

“Amazing Grace” is centuries old. It appeared in John Newton’s Olney Hymns in 1779, so it’s in the public domain. However, Underwood’s modern recording is a separate work from the hymn. Even though “Amazing Grace” is in the public domain, Underwood’s recording of it is covered by copyright law.

Background music inside a store, a recording placed in an online video, and music used during an event can involve different rights. An attorney can help determine what permissions are needed for the specific use.

A Private Event Can Still Be a Public Performance

The word “public” doesn’t always mean that anyone can walk in off the street. Copyright law can treat a performance as public when it takes place somewhere open to the public, but it also can include performances before a substantial number of people. A company holiday party isn’t necessarily private because only employees can attend. Nor is a senior housing community’s aerobics class automatically private under copyright law because only residents can participate.

The same issue can arise at an apartment-community event, private club gathering, nonprofit fundraiser, or customer appreciation event. Businesses sometimes focus on whether tickets are sold or whether they make money from an event. However, absence of an admission charge or a charitable purpose doesn’t create a general exemption from copyright law.

Others believe that educational institutions can use copyrighted material without paying royalties as fair use. But there is no blanket educational exemption, and a fair use analysis can be nuanced. Before relying on an exemption, businesses and educational institutions should have an attorney evaluate whether the exemption applies to their specific circumstances.

When an Exemption Applies

There are some exemptions to the public performance license requirements. For example, restaurants and drinking establishments consisting of less than 3,750 gross square feet can qualify for an exemption. For other establishments, the threshold is just 2,000 gross square feet.

Sometimes, other establishments can qualify based on their use of speakers and, for television, audiovisual equipment, whether they charge admission, whether the event is retransmitted, and meeting other requirements, so square footage alone isn’t dispositive.

The exemption also isn’t a general exception for every type of music used by a small business. A coffee shop can’t simply determine that it’s under the square-footage limit, connect an employee’s Spotify or Apple Music account to its speakers, and assume no further analysis is necessary because the business also must consider the terms of service on their account. A business that wants to rely on the exemption should have an attorney review the actual music source, equipment, and use.

Performance Rights Organizations Handle Many Public-Performance Licenses

A business owner doesn’t need to contact every songwriter and publisher whose music appears on its playlist. Performing rights organizations, commonly called PROs, make licensing more practical by representing large catalogs of musical compositions and issuing public-performance licenses on behalf of songwriters and publishers.

The major organizations in the United States include ASCAP, BMI, SESAC, and Global Music Rights, or GMR. Each organization represents different music, and a license from one doesn’t automatically give a business permission to perform everything represented by another.

Blanket licenses can allow a business to perform works within a PRO’s repertoire without negotiating separately for every song. The appropriate licenses will depend on what music the business uses and how it uses it. A single song also may have several writers, and those writers may have different publishing arrangements or affiliations. So, a business may need more than one PRO license to cover the music it uses.

Business Music Services Can Be Another Option

Instead of using a personal streaming account and arranging public-performance licenses separately, a business can subscribe to a commercial music service designed specifically for business use. Mood Media, which owns the Muzak brand, continues to provide music services for commercial environments, and other companies offer similar products.

While a commercial music service can simplify some licensing issues, the business still must review what its subscription covers. The service may cover music played through its own system without covering other sources of music, live performances, special events, or music used in promotional content.

It’s easy to treat music licensing as a “set it up and forget it” item. However, businesses’ use of music can evolve over time. A restaurant that begins with quiet background music may later add live performances, private events, or online promotional videos. Before a business changes how it uses music, it should have an attorney review its licenses to determine whether they cover those uses.

Conclusion

Years ago, while I was advising a client on general business issues, someone mentioned the playlist for an upcoming event for several dozen employees. I asked about the company’s public-performance licenses, and the manager explained that he planned to amplify music from his personal streaming service. As far as he was concerned, that meant the company didn’t need another license.

When I pointed out that a personal subscription was limited to family use, he flippantly replied: “We’re all one big family here.” It was an inventive argument, but copyright law and streaming services’ terms of service don’t consider coworkers family members or treat a commercial use like a personal one just because someone believes they are “like family.”

Most businesses that play unlicensed music simply think that paying for a streaming subscription justifies their actions. To them, moving outside of the terms of service is victimless, or just affects a corporate giant.

But unauthorized use isn’t victimless. Songwriters and composers put their hearts and souls, as well as many hours, into creating melodies and lyrics. Artists, musicians, producers, and others turn those songs into high-quality sound recordings. The value that music professionals get from their efforts is tied to its ability to generate royalty revenue.

Businesses ignore that they use music because it has value. It can change the mood of a restaurant, energize a fitness class, make a store feel more inviting, or bring people together at an event. If the music didn’t add value, the business wouldn’t use it. The songwriters and artists whose work creates that experience are entitled to the protections copyright law gives them.

Music is easier to access than it has ever been, but access and permission aren’t the same thing. Businesses and commercial property owners that use music should identify how they’re using it, determine what licenses apply, and have an attorney review the arrangement to ensure they understand their obligation to pay royalties.

© 2026 by Elizabeth A. Whitman

Any references to clients and their legal situations have been modified to protect client confidentiality, and real-life situations have been modified to protect the individuals’ privacy.

DISCLAIMER: The content of this blog is for informational purposes only and does not provide legal advice to any person. No one should take any action regarding the information in this blog without first seeking the advice of an attorney. Neither reading this blog nor communication with Whitman Legal Solutions, LLC or Elizabeth A. Whitman creates an attorney-client relationship. No attorney-client relationship will exist with Whitman Legal Solutions, LLC or any attorney affiliated with it unless a written contract is signed by all parties and any conditions in such contract are satisfied.