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Do retailers really need to pay music royalties? Here’s your answer.

Retail establishments, much like radio stations, television networks, or digital streaming platforms, use music as part of their services. It’s a vital part of the retail experience.

However, this usage isn't free; under copyright law, playing music in a commercial setting constitutes a public performance of the work, which means royalties are owed to the copyright holders.

But who exactly are the stakeholders involved in music royalties? Let's break it down.

Who’s Who in the World of Music Royalties

1. Artists (Performers and Songwriters)

The artist - often considered the most visible stakeholder - is typically the performer and sometimes also the songwriter. Artists earn a portion of music royalties through their performances and creative input. Take for instance Adele, a notable singer-songwriter. She benefits from both performance royalties and mechanical royalties as a performer of her songs and as a songwriter.

2. Record Labels

Record labels are entities that sign artists, market their music, and often fund the production of albums and music videos. Major labels such as Universal Music Group, Sony Music Entertainment, and Warner Music Group are primary stakeholders, earning a considerable chunk of royalties from the music they help produce and distribute.

3. Music Publishers

Music publishers are responsible for ensuring songwriters and composers receive payment when their compositions are used commercially. They license songs, negotiate deals, and collect royalties on behalf of the songwriters. Bob Dylan, for example, sold his entire songwriting catalog to Universal Music Publishing Group, making them the stakeholder responsible for managing and collecting royalties from his body of work.

4. PROs (Performance Rights Organizations)

PROs like FILSCAP, PRM, and Soundsright are organizations that protect the rights of songwriters and publishers. They track where songs are played (be it radio, TV, or digital platforms), collect performance royalties, and distribute them to the rights holders.

Here is a simple diagram that illustrates this:
How does this affect my retail business?

When a retail store plays a song, it's performing that music publicly, and under copyright law, they need to pay for that right. This is where Performance Rights Organizations (PROs) come in. These organizations license, track, and collect royalties for the public performance of musical works on behalf of the copyright holders.

Retail establishments pay licensing fees to these PROs, who then distribute the royalties to the songwriters and publishers. If businesses don't secure these licenses, they risk infringing on copyrights and could face legal repercussions, including hefty fines.

The same principle applies to restaurants, bars, offices, or any other business that plays music publicly.

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