78% of small-to-midsize businesses in the US currently misuse personal streaming accounts to play music to their customers. It’s costing the music industry $1.38 billion per year.

Ola Sars

MBW Views is a series of op/eds from eminent music industry people… with something to say. In the following article, Ola Sars, Founder, CEO & ChairmanSoundtrack Your Brand, writes about what he says is “the rampant misuse of music in business and commercial settings”. According to Sars,more than two-thirds of U.S. businesses engage in unauthorized use of consumer services to play music, resulting in a 3x loss in value to the music industry”…

What Happened in Vegas Can’t Stay There

The unparalleled ambiance of Las Vegas is crafted by decades of historic glitz and glamour and every element of the famous Strip is meant to capture guests’ attention and emotion. That’s why, when the historic Venetian came under new management by Apollo Private Equity, all eyes were on the investment in the hotel’s experience. The biggest news came in November, however, when Apollo was hit with a $264 million lawsuit for illegally streaming songs via YouTube at its high-end karaoke lounge. It is this lack of investment – in music rights and artist ownership – that now plagues the Vegas icon.

This high-profile case is driving industry attention to massive unlicensed misuse of music in businesses and commercial spaces, and this is only the beginning. The problem is much larger than one recognizable nightclub skirting the rules, as nearly 78% of the 3.8 million small to midsize businesses in the U.S. alone are misusing music. As many venues, like consumers, see the ease in using YouTube, personal playlists and more, too few understand how music licensing works because of rampant misinformation and market confusion within the industry itself. The Apollo case provides the industry with an opening to raise awareness of its processes and alert businesses to legal and compliant ways to provide music experiences for their guests.

Let the Music Play…Legally

Our industry understands that music offers important benefits for businesses. It creates a unique atmosphere, influences customer behavior, motivates sales, and enhances their brand experience. In fact, according to Luminate’s U.S. Music 360 study, 33% of US consumers ages 13+ stated that they discovered music by hearing it in business and public spaces, which doubles down on the essential creative value of musicians, writers, and production artists, and like any industry asset or value, it doesn’t come for free.

Every track must be accounted for, legal, and fully licensed for business and commercial use. It’s our collective responsibility to help ensure that the creators and rights holders of music used to enhance brand and commerce experiences are properly remunerated. If copyrighted music is performed in public or common areas, regardless of the method, the business must obtain permission from the copyright owner. Individual PRO licenses provide copyright permission to specifically play the catalog the license represents.

That’s why services that can provide a license representing a full catalog of music like Soundtrack Your Brand can be the best protection against illegal use. Some businesses may also require a license for live music, but this alone is not a catch-all or cover YouTube for karaoke–as in the case of Apollo–or other instances where businesses play overhead music for their patrons that cannot be streamed via personal music accounts or consumer DSPs.

The High Cost of Doing Nothing

When confusion comes from within our industry, we must collectively shoulder the burden of educating businesses and creating a path to compliant relationships with our product. The majority of business owners don’t believe they will hit the headlines for playing their personal streaming service so they hedge their bets against the risk. With 3.8 million businesses in the U.S., we have a responsibility to inform and educate on proper use, rampant music misuse, loss of income for music creators and rights holders, and the potential fines they face.

The costs and the misuse are staggering. The amount that a business can be fined for not having proper ASCAP and BMI licenses can vary based on the case, but copyright infringement can range from a few thousand dollars to several hundred thousand dollars, depending on the severity of the infringement and whether the infringement was willful or not. Beyond the fines, businesses could also be required to pay damages to the copyright holders for any losses incurred because of the infringement.

Over and over again, legal cases prove that infringement and misuse can add up to millions and it crosses industries from bars and restaurants to coffee shops and retail. In 2023, a Topeka, Kansas bar and a San Francisco nightclub were ordered to pay up to $30,000 in damages per infringement for playing copyrighted music without a license. The cases continue to proliferate. An industry-wide educational campaign on misuse and what happens to serial infringers has the potential to be more effective than fining those who are not compliant among our 3.8 million businesses.

Protecting our Industry

Soundtrack Your Brand and other B2B and background music services offer different value than DSP and ad-based services. For those of us who properly comply with music copyright law, we are equally challenged by the rampant misuse by consumer DSP and ad-based services such as YouTube or Pandora’s consumer service currently used by 78% of businesses who play music from their personal music accounts – while it seems the industry turns a blind eye.

While certain licensing groups reap the benefit of fines, it’s a drop in the bucket of what really occurs in the market, as our industry can see a loss of $1.38 billion in revenue per year for music creators and right-holders, while their music is being used and played in businesses every day to entertain customers, build their brands and often increase sales. Here’s how the math breaks down: 3.8 million businesses x 78% = 2.964 x $468 per year (for a compliant background music subscription) = $1.38 billion. For an industry fighting for artists’ rights, reclaiming tour revenue post-pandemic, and facing AI creative innovation, leaving that money on the table is senseless.

Those we should be advocating for, those we rely on for our businesses — music creators–are not being remunerated for the use of their music and are losing money, this time in places of business and commercial spaces.

The Power of Clarity

Hospitality, restaurants, retailers, and other businesses are all misusing music because we as an industry aren’t providing clarity on what they can or can’t do. Some PROs have provided inaccurate information, as they seek to solely collect on the share of their catalog, exacerbating the misuse.

It’s not surprising that businesses expect their commercial and personal music service to provide a similar experience and selection of music. In order to create the experience that consumers and businesses have become accustomed to, in terms of being able to play what they want when they want from a vast catalog of music of over 100 million tracks, Soundtrack secured over 16,000 direct licenses with labels and publishers globally.

Today, artists and creators are losing money because of the lack of education and clarity around the use of music in business and commercial spaces. If we allow misuse to continue at this level, we diminish the value of music globally. Help ensure that commercial music is properly used and licensed so that music creators and right holders are remunerated and that those who are working diligently on behalf of the rights owner can effectively continue to provide and fulfill the unique needs around B2B music.

2024 doesn’t have to see another $1.38 billion loss if we can come together as an industry and bring clarity to business and commercial music users globally.Music Business Worldwide