Not too long ago, Sonic Effect Blog published an article about the legal issues involved with playing Spotify or similar music streaming services in a commercial venue, such as a shop, bar or restaurant. We received a huge amount of reactions and questions. This is a complex subject, which involves different legislation in different countries. Considering the huge demand for clear information, we decided to get an expert involved for a round 2: Mr. Mauritz Kop – Music and entertainment lawyer at MuziekenRecht.nl
To bring you guys the most accurate and reliable information, we have conducted a short interview with Mr. Kop, which we hope you will find enlightening. Let’s dive in!
1. A while ago, Triggerpulling reported that playing Spotify in a shop, bar or restaurant is not allowed, regardless of which fees you pay to rights handling organizations. The problem is music licensing. As a retail or hospitality entrepreneur, you cannot do anything about this. Could you share with us the current situation? Has anything changed?
Commercial use of Spotify is still not allowed in most countries. Article 4 of the Spotify legal terms specifically states that only personal use is allowed and no commercial use. Personal use means using Spotify at home or while on the road (in your own car or on your bike). Commercial use means the use in the office, in a restaurant or bar, venue or shop. Furthermore, article 24 of the Spotify terms and conditions says Swedish law is applicable.
The prohibition of commercial use of Spotify is not without reason. It has everything to do with music licensing, or rather, the absence thereof. Spotify doesn’t have a music license deal with the performance rights organizations (PRO’s, such as Buma/Stemra, PRS for Music and Ascap BMI) in The Netherlands, UK and USA for online commercial use of the application. On top of that, Spotify does not have a distribution deal with the major labels for commercial on demand online music usage.
2. Are there any differences between markets? If so, could you summarize the most important distinctions between the Dutch, USA and Nordic country markets?
Yes, there are differences. Intellectual property rights are territorial rights, meaning that their exact content, scope and enforcement methods are predominantly determined at a territorial level.
Spotify Business acquired commercial music licenses in the Nordic countries (Sweden, Norway and Finland). So in Sweden it is possible for a bar or restaurant to use Spotify Business to entertain its guests. Of course, the right music can set the right mood, strengthen your brand and increase sales or productivity. And you can listen to Spotify in your office all day long in Finland.
Soundtrack your Brand is a Spotify spinoff, which offers 2 services: Spotify Business and Soundtrack Business. Spotify Business is available in Sweden, Norway and Finland. Soundtrack Business is available in the rest of the world, including the USA, where no music licenses for commercial use of Spotify (i.e. Spotify Business) exists.
Offering an on demand streaming platform for commercial use requires specific music licensing. Licenses need to cover performance rights, mechanical rights and master rights.
3. How do other media compare? What about personal CD’s, iTunes purchases or radio? What is and what is not allowed?
Rule of thumb in the Netherlands is that an office or a public venue needs a dual or combined license from both Buma/Stemra and Sena. This covers the relevant copyrights and neighbouring rights when performing music in public, such as streaming tracks in a business.
The license fee and the tariffs depend on the business type and size of the company, so the number of employees and the number of square feet will be relevant.
For streaming apps: you should always check out the legal terms first or ask for specialized music legal advice.
4. Are there any Spotify-like platforms that are different? Deezer perhaps?
Article 1 of the Deezer terms and condition specifically states that commercial use is not allowed and that the license has a scope for personal use. The same applies to their free, premium and elite models. No difference with Spotify there.
5. Or is legal use limited to professional suppliers such as Mood Media and Soundtrack you brand?
Again, this depends on music licensing. Professional music suppliers such as Soundtrack Business and Mood Media acquired the necessary licenses to offer their services to their clients. If these clients are offices, restaurants or bars they also need to have the dual licenses from the performance rights organizations of the country where they are located.
In the Netherlands, the NVPI (trade association of the Dutch entertainment industry) has negotiated collective licenses for background music in public venues, with music suppliers as Xenox Music & Media, Playmusic, Media Tools, DJ-Matic and The Music Marketeers. An important difference between offline background music and Spotify is the absence of interactivity.
6. How about Pandora for Business?
A new personalized business radio service is Pandora for Business. At the moment it is only available in de United States. It also needs a dedicated player. It’s a collaboration between Pandora (which is also not available in Europe) and Mood Media. So Pandora for Business managed to secure the relevant music rights from all the stakeholders involved. A myriad of small and larger parties. Mood Media negotiated direct licenses with indies, the major record labels (such as Universal, EMI, Warner, Sony), PRO’s such as Ascap, Sesac and BMI and the Harry Fox Agency to be able to offer their service to business in the territory of The United States.
We would like to thank Mr. Mauritz Kop – Music and entertainment lawyer at MuziekenRecht.nl for his great contribution! Hopefully this article will help you decide which musical route to take for your own business.
Sonic Effect blog is a part of Sonic Effect. Check out our main website here: www.sonic-effect.com