This playbook is for commercial businesses that play music in customer-facing environments. That includes retail stores, restaurants, bars, fitness studios, gyms, hotels, offices, medical practices, and multi-location brands with one door or hundreds.
Music is part of how customers experience your business. It shapes mood, reinforces brand identity, and influences how long people stay. At the same time, music is regulated under copyright law. Playing recorded music or live music in a business setting creates legal and operational responsibilities that many businesses do not fully understand until something goes wrong.
This guide is designed to help you understand how to legally play music in your business at a practical level. It explains music licensing requirements in plain language, walks through common compliance mistakes, and outlines clear paths businesses use to stay compliant.
This is not legal advice. It is an operational playbook. You can follow each step in order to build a repeatable, scalable approach to music that protects your brand, minimizes risk, and supports long-term growth.
Step 1: Determine whether your music use counts as a public performance
The first step is understanding whether your business is publicly performing music.
A public performance happens when copyrighted music is played outside of a private, personal setting. In business terms, this means music that can be heard by anyone beyond yourself. If customers, clients, members, or guests can hear the music, it is almost always considered a public performance.
Ask yourself the following questions:
- Are customers or clients present when music is playing?
- Is music audible beyond private, personal use?
- Is music played in multiple rooms or shared spaces?
- Do you host classes, events, gatherings, or group activities where music is part of the experience?
If you answered yes to any of these, your business is likely publicly performing copyrighted music. Music users—including restaurants, bars, retail stores, and other organizations—need to be aware of licensing requirements to ensure they are compliant.
There are several common misunderstandings that cause confusion. Playing music quietly does not change the requirement. Calling it background music does not change the requirement. Limiting it to employees does not automatically remove the requirement if the space is still commercial in nature.
The takeaway is straightforward. Most customer-facing businesses need a public performance license to legally play music.
Step 2: Stop using music sources that are not designed for business use
Many compliance issues start with music sources that were never intended for commercial environments.
Personal music accounts and consumer streaming services such as Spotify, Apple Music, and YouTube Music are licensed for private listening only. They are not licensed for business use of music. Playing music from these platforms in a business environment is illegal, even if the account is paid, even if ads are removed, and even if the music is only playing quietly in the background.
Personal playlists built on these platforms are also illegal to use in a business. The license attached to these services does not include the right to publicly perform copyrighted music.
Radio is another area of confusion. Broadcast radio transmissions are licensed for public performance by the radio station, but that license does not automatically extend to businesses that play the radio in public spaces. There are specific legal distinctions between broadcast radio and other music sources, and exemptions may apply under certain conditions. Similarly, television broadcasts that include copyrighted music are also subject to public performance rights and generally require a license unless an exemption applies.
Sources that are typically non-compliant in business settings include:
- Personal or consumer streaming accounts
- Employee-owned playlists
- Personal phones or laptops connected to speakers
- Radio stations played in public areas
The Fairness in Music Licensing Act allows certain establishments to broadcast radio and television without a formal license under specific conditions, such as limitations on the size of the business and the number of speakers or televisions used.
This step is about awareness, not blame. Many businesses start this way. Removing non-compliant music sources immediately reduces unnecessary risk and creates space to implement a compliant solution.
Step 3: Understand the types of licenses involved, high level only
Music licensing feels complex because multiple rights are involved.
At a high level, music includes two components. The composition, which is the song itself, and the sound recording, which is a specific recorded version of that song. Both are protected as copyrighted music. Record labels typically own the master sound recordings and are responsible for distributing and marketing music, while the rights to the composition are held by songwriters and publishers.
Performing rights organizations, often referred to as PROs, represent songwriters and publishers and manage public performance licenses on their behalf. These organizations collect license fees and distribute royalties when copyrighted music is publicly performed in a business environment.
There are several types of music licenses. A mechanical license is required to record and distribute music in physical or digital formats, such as CDs or downloads, and is usually obtained from music publishers or agencies like the Harry Fox Agency. A synchronization license is needed to pair music with visual content, such as in films, TV shows, or commercials, and is typically obtained directly from the music publisher. A program license permits the performance of copyrighted music within specific broadcast settings, like radio or television programs, and covers the rights needed for music used during a particular broadcast or production. These licenses are distinct from public performance licenses, which are generally managed by PROs.
Businesses often need coverage from multiple rights holders because no single organization represents all music. Licensing with only one organization can leave gaps where certain artists or songs are not covered, making it illegal to play them.
A public performance license generally covers the right to play recorded music in your business. It does not automatically cover live music, DJs, karaoke, or ticketed events. Those uses typically require additional licenses or permissions. The type of public performance license needed depends on how the music is transmitted, such as through streaming services or live performances.
This complexity is why many businesses look for ways to simplify compliance rather than managing every element themselves.
Step 4: Choose your compliance approach, DIY vs business music provider
Once you understand that licensing is required, the next step is choosing how to comply.
There are two primary approaches. Managing licensing yourself or using a business music provider.
The DIY route involves building direct relationships with rights organizations, paying license fees, tracking renewals, and sourcing music and playback tools independently. This approach provides maximum control but requires ongoing administrative effort and coordination.
The business music provider route consolidates licensing, music, and playback into a single service. Licensing is handled through the provider, music is curated for business use, and controls are designed for commercial environments.
Neither approach is automatically right or wrong. The decision depends on your business size, number of locations, internal resources, and tolerance for operational complexity.
Step 5: If you go DIY, understand the operational commitment
Managing music licensing directly is possible, but it is operationally demanding. One of the key tasks involved is negotiating licenses with rights holders, publishers, or licensing organizations to secure the appropriate permissions for your specific music use.
Businesses choosing this path must identify which licenses they need, pay and renew them on time, maintain documentation, and monitor compliance as their business evolves. License fees vary based on factors such as venue type, square footage, operating hours, and how music is used.
Licensing alone does not solve the real-world problem of music in your business. You still need a clean, brand-appropriate library of recorded music that avoids explicit content, minimizes repetition, and provides enough variety to support long operating hours.
Building and maintaining that library requires ongoing curation, clear rules around energy and tone, and frequent updates. As businesses grow, this becomes harder to manage. What starts as a licensing task becomes an ongoing operational responsibility tied directly to brand perception and customer experience.
Step 6: If you use a provider, know what to verify
Many businesses choose a licensed music provider to simplify compliance and reduce risk.
Before signing with any provider, confirm:
- What licensing is included and what is not
- How many locations and devices are covered
- Whether the service supports expansion into new territories
- How usage is tracked and managed
Beyond licensing, businesses should evaluate non-licensing benefits such as curated stations, scheduling, brand consistency, and centralized control across multiple locations.
Custom Channels is an example of a provider designed to simplify compliance while supporting brand execution at scale. Music is centrally managed through a locked-down dashboard, devices are controlled remotely, and employees cannot introduce unlicensed or off-brand music. This approach removes risk from day-to-day operations without requiring constant oversight.
Step 7: Plan ahead for scenarios that commonly create compliance gaps
Many compliance issues arise not from everyday background music, but from scenarios that are overlooked. If your business features a live band, you must ensure proper licensing is in place for their performances. Concert promoters are responsible for securing the necessary licenses for live events to ensure all public performances of copyrighted music are legal. Additionally, licensing fees for live events may be influenced by ticket revenue, as organizations like ASCAP often consider ticket sales when calculating costs.
These include live music, DJs, karaoke, ticketed events, fitness classes with instructor-led playlists, and large public gatherings. These uses often require additional licensing and should never be assumed to be covered.
Businesses must obtain a license for any live music performed, unless the music is completely original.
Multi-location and franchise businesses face added complexity. Without clear standards, individual locations may introduce inconsistent or illegal music practices.
Proactive planning prevents reactive fixes. These scenarios require intentional decisions, not assumptions.
Step 8: Create an internal music compliance policy
Music compliance is a top-down responsibility.
If employees can plug in personal devices or play unlicensed playlists, the business is at risk. Allowing unlicensed music to be played exposes the business to legal liabilities and penalties for unauthorized use of copyrighted material. That risk belongs to ownership, not the employee. Employees will always find workarounds when leadership is off-site.
A simple internal policy should include:
- Approved music sources and playback devices
- Clear ownership of music decisions
- Basic staff training guidelines
This is not bureaucracy. It is a scalability tool. A locked-down music system communicates clearly, this is how we handle music here. It minimizes repetition, protects the brand, and removes the temptation to use illegal personal playlists.
Step 9: Maintain compliance over time
Music compliance is not a one-time task.
Businesses should review their approach at least annually and whenever changes occur. Triggers include opening new locations, remodeling spaces, adding events, or changing formats. As licensees pay ongoing licensing fees to organizations like ASCAP, it is important to ensure that all required payments and licenses remain current.
Centralized dashboards make it easier to identify issues such as music outages, network problems, or what music is playing where. Visibility is critical when you are not physically on site.
Maintaining compliance is about confidence. Knowing this part of the business is handled correctly allows leaders to focus elsewhere.
Performance Rights Organizations actively monitor and enforce the rights of their members by demanding payment and suing violators.
Make Music a Brand Asset Without the Risk
Music can be one of the most powerful and cost-effective brand assets in your business. It influences how customers feel, how long they stay, and how they remember the experience.
This playbook outlined how to legally play music in your business by understanding music licensing requirements, identifying risk, and choosing a scalable approach to compliance.
Compliance does not need to be complicated. With the right system, music becomes strategic, consistent, and hassle free.
If you want help building a compliant, on-brand music experience that scales with your business, Custom Channels can help you evaluate options and design an approach that fits your needs.
For deeper reference, review music licensing laws, download music licensing 101, or explore our resource hub on music licensing for business.
Frequently Asked Questions
Do I need a music license if the music is played quietly or only as background music?
Yes. If music is publicly audible in a business environment, it requires licensing regardless of volume or intent.
Can I use a personal or consumer streaming account to play music in my business?
No. Personal streaming accounts are licensed for private listening only and are not legal for business use.
What is a public performance license, and what does it actually cover?
It grants permission to publicly perform copyrighted music in a commercial setting. Coverage varies and does not automatically include live music or events.
Do multi-location or franchise businesses need separate music licenses for each location?
Yes. Coverage depends on the licensing structure or provider agreement. Majority of the time licensing is covered by the physical location address.
Is it easier to manage music compliance through a business music provider than doing it myself?
For many businesses, yes. Providers consolidate licensing, music, and control, reducing risk and operational burden.
Written by Mark Willett, Head of Partnerships, Custom Channels
Reviewed by Josh Torrison, Head of Marketing, Custom Channels
Josh Torrison has spent nearly a decade at Custom Channels helping national brands manage music compliance, curate on-brand sound, and resolve licensing questions across retail, hospitality, and restaurant environments.
