Music license fees in the Retail and HoReCa segments

Every entrepreneur operating a brick-and-mortar store selling goods or providing services, owning a restaurant, café, bar, hotel, or other accommodation facility, has undoubtedly heard about the obligation to pay licensing fees for using radio or television in its commercial premises. However, when you start exploring this topic, you will find that the area of licenses for the use of intellectual property is not a simple matter. Few understand it and even fewer can provide a clear and precise answers to questions such as why, when, to whom, and how much you must pay.

Misunderstanding or ignoring this agenda can lead to unnecessary legal disputes, fines, or a situation where you end up paying more than you are supposed to. This article will not give answers to all questions about licensing fees obligations arising from using radio and TV in commercial premises. However, we will try to give you a guideline to understand the basic rules and help you to assess your obligations and potential risks relating to music licenses.

Why do I have to pay licensing fees?

Every person who creates something, values his/her time, effort, and talent invested in the process. It is entirely natural that if you use someone else’s work for commercial purposes, the author, performer, or even the publisher claims its reward. The argument for requesting payment from you is because on the fact that you use the result of their work to generate revenue, and they are entitled to a portion of your revenue generated using their work as a tool to achieve that revenue. We deliberately mention revenue, because from revenue to profit is a long and painful path that an entrepreneur must always go through alone.

Importantly, the source of music is not a significant factor in determining the obligation to pay music licensing fees. Many operators of commercial spaces mistakenly believe that if they play music from terrestrial (standard) radio or have an online radio, this obligation does not apply to them. The important factor for determining the obligation to pay music licensing fees is not the type of technical equipment or the music source provider, but the content itself, i.e. whether the music played in a venue is under license protection or not. In most cases, it involves music that is subject to license protection. There is also so-called royalty-free music, but such music is only provided by certain music solution suppliers, so if you are not sure that your supplier is providing royalty-free music, always work on the assumption that you must pay to play the music in your commercial premises.

We covered the topic of royalty-free music in another article, which you can find at this link.

When do I become liable to pay licensing fees?

The answer to this question is very simple. Once you start using music for commercial purposes you are obliged to register with the relevant organizations and start paying royalties according to their price list.

Whom do I pay music licensing fees to?

To answer this question, we need to go into more detail. In each country, there are several Performance Right Organizations (PROs) that oversee the protection of intellectual property rights, the collection and distribution of licensing fees to the owners of these rights. Each of them represents a specific group of intellectual property owners. For example, in Slovakia, organizations such as SOZA, SLOVGRAM, LITA, OZIS, and SAPA operate.

The most common scenario is that a commercial space operator plays music in its venue. For this type of use of intellectual property, PROs like SOZA and SLOVGRAM are relevant (for Slovak market). In simplicity, SOZA represents authors of music and lyrics, as well as publishers of these works. SLOVGRAM ensures the protection of the rights of performing artists (interpreters) and sound recording producers. So, each of these organizations protects different owners of intellectual property rights, and for both, you are required to register and pay licensing fees.

Based on above mentioned, if you turn on even a simple small radio in your commercial establishment or connect your phone to an external speaker via Bluetooth and play music, you are obliged to register with SOZA and SLOVGRAM and start paying licensing fees. If you also turn on the television in your establishment and tune in news or a sports channel, additional organizations protecting intellectual property rights come into play.

SOZA is probably the most well-known PRO in Slovakia. Still, paying licensing fees to SOZA does not mean you are “safe,” and you are not at risk of fines for failing to meet your intellectual property protection obligations. Therefore, if you are setting up a new business or, due to the way or extent of using works subject to copyright protection, you are unsure whom to register with, do not hesitate to contact our company; we will be happy to advise you. You can find the contact details for our company here.

How much do I have to pay for music license fees in the Retail and HoReCa business?

Once you know that you have an obligation to pay licensing fees and whom to pay, the last thing you need to clarify is how much you will pay for music license fees in the Retail and HoReCa segments. Each PRO publishes its own price list, with own logic how the fee is calculated. Therefore, for each PRO, it is necessary to understand the logic of fee calculation, considering several parameters such as the type of business, the size of commercial spaces, the scope of use of works subject to copyright protection, as well as other more exotic criteria such as the type of device through which you reproduce works, the location of the establishment, and more. For companies operating in multiple countries, it is worth mentioning that although PROs are somewhat similar in each country, the logic of calculation and, above all, the amount of the fee differ. Therefore, it is necessary to address this issue for each country separately.

All PROs overseeing the protection of copyrights usually have their current price lists available on their websites. The problem, however, is that for someone who is not familiar with this topic, it can be challenging to extract the relevant fee amount from the price list. Of course, you have the option to contact the respective PRO, which will calculate the license fee according to its rules and the current price list. In this case, however, you will most likely end up with a “default price,” without taking advantage of various discounts or optimal pricing settings. Therefore, if you are not sure that you can precisely determine the amount of your fee according to the price list, turn to someone who deals with this issue. We are happy to provide you with a consultation (free of charge) to discuss the possibilities how to optimize your reporting and license fee payment obligations. You can find the contact details for our company here.

For the sake of administrative simplification around license fees, PROs in most countries have agreed to provide price list covering all PROs. Still, in many cases, the fee ends up being higher than if you were to negotiate contracts with every relevant PRO separately.

Transfer of the obligation to pay licensing fees to Songoroo

Our company offers its clients the option to get rid of the administrative burden associated with paying music license fees. Moreover, as part of managing payments and related administration, we can often negotiate better conditions with PROs than if you negotiated them yourself. The logic is similar to mortgage advisers; we take care of the whole agenda for you, you pay nothing extra, and you even save on fees. We can provide you with a free consultation to discuss options for optimising your obligations and payments around licensing fees.

Do not hesitate to contact us. You can find the contact details for our company here.

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