WWW FAQs: How do I get the rights to play copyrighted music on my Internet radio station?

2007-12-05: "I want to run a legitimate Internet radio station. I don't want to use live365 or a similar service that does all the work for me. How do I get the rights to the songs I play on my Internet radio station, and how much does it cost?"

You've decided to take on a difficult project, my friend. There's a reason why people use Live365 or a similar service that has taken on all of the paperwork and legal difficulties involved. And there are large minimum royalty payments involved, too. Money you don't have, if you're "just a regular guy" (or gal).

So if you find all of this complicated... don't say I didn't warn you. Even the most high-end packages offered by Live365 and its relatives— packages that fit in smoothly with your own website - don't cost nearly as much as going it alone, unless your Internet radio station is a substantial business.

This answer is appropriate in the United States of America. The law in other countries will vary. I am not a lawyer and cannot give legal advice. I accept no responsibility for the consequences of following this advice. The law and the policies of the organizations involved may or may not have changed since this article was written. If you have serious legal questions please consult a lawyer!

What You Can And Can't Do On An Internet "Radio Station"

First, let's define our terms. You want to run an Internet radio station, right? What does that really mean? It's not an idle question. If you don't follow the rules regarding what you can and can't do on your station, then paying the royalty fees won't protect you from a lawsuit!
BREAKING NEWS 2009/07/07: SoundExchange has struck a deal with several webcasters. In a nutshell, the deal calls for webcasters to pay reduced rates or 25% of their revenue, whichever is greater. This is a good deal for "pure-play" webcasters who don't have other sources of revenue apart from advertising on their sites. See the soundexchange.com web site for more information about these recent developments.
Legally, an Internet Radio station plays a single stream or "channel" of music. If you have a "loop" of songs that you play, that loop must be at least three hours long. You must not intentionally play songs by the same artist or from the same album too often. You definitely can't let users pick what songs or artists they hear. And under no circumstances will you help users to save the songs to their hard drive and play them whenever they want.

Also, you must display to the user the song name, artist, and all other available information about the song while the song is playing— but not before. What's more, you must not publish a schedule of what's coming up on your station and when.

All of these rules are part of the DMCA (Digital Millennium Copyright Act) definition of an Internet radio broadcast. And if you don't follow them, you're not eligible for the type of licensing I'll discuss here.

If you think this is all very difficult, wait till you see the minimum royalties you'll be paying!

Honestly, if you're thinking this isn't going to work for you... you're probably right. This isn't a technical problem, it's a legal and business problem and it's very, very difficult to get right. Take it seriously. Consult an attorney, too. Or use a service that takes it seriously for you.

"Ahrgh! But who do I pay? And how much? Make it easy for me!"

Patience, grasshopper. We're not there yet. You need to pay at least two organizations— maybe as many as four. And you need to understand why, too.

But hey, you chose to do this the hard way. So don't blame me, I'm just the messenger here. If you don't like it, use live365 or a similar service that does all this busywork for you.

Composer's Rights Versus Sound Recording Rights

There are two types of licenses you must have before you can play, for instance, OK Go's song Here It Goes Again as part of your Internet radio broadcast:

1. A performance license for the composition. This is the right to perform the song (the notes and the lyrics), as licensed by BMI.

2. A performance license for the sound recording. This is the right to use a specific recording of the song— in this case, OK Go's recording of the song on the album Oh No released by Capitol Records and licensed by SoundExchange.

That's right: to play the recording of Here It Goes Again that everyone is familiar with on your Internet radio station, you need a license for both the composition and the recording.

"Ahrgh! Do I have to talk to every single band and record company?"

Fortunately, no. It's not quite that bad! You need to work with three organizations that handle composition performance licensing, and one organization that handles sound recording licensing.

How To Get A Performance License For The Compositions

You want to stream songs on your Internet radio station. And you're willing to do what it takes to make sure the original songwriters are compensated (and stay out of legal trouble). But how do you go about it?

There are three major organizations that handle the right to perform a composition (song) in public (and yes, that includes playing it on the radio, Internet or otherwise). Nearly all popular musicians are a members of one of the big three: ASCAP, SESAC, and BMI.

Unfortunately, you must figure out which bands belong to which of these organizations and keep track of how many hours of music were sent out for each of the three. This can be a challenge, but the responsibility is yours. That's life in the big city.

Is This Song Licensed With ASCAP, SESAC, or BMI?

Good question. Here's how you find out!

1. Do you have the CD? Good! Look at the sleeve. This information shouldn't be hard to find in the fine print. This is the surest way to find it.

2. Try ASCAP's title search page. I recommend searching for the song title. Try spelling variations and search by artist if that doesn't work.

3. Search BMI's repertoire database (use the form on the right-hand side of the page). Again, I recommend searching for the song title first.

4. Check SESAC's repertoire search page.

If you can't find the song in any of the three databases, look again at the CD sleeve and liner notes! You'll likely find that BMI, SESAC or ASCAP is mentioned.

Still have no idea who licenses the song? Then I recommend you contact the band's management directly (often not difficult to do via their website). Ask them whether their compositions are licensed through BMI, SESAC, or ASCAP and be sure they tell you which one! If they are not a member of any of these organizations, ask who you should talk to for a performance license. You may be able to negotiate directly with the musicians or their management.

Example: I searched all three databases for OK Go's Here It Goes Again. I found it in BMI's database, which states that the song is licensed via BMI. A search for "OK Go" failed, but a search for "Here It Goes Again" was successful.

How Do I Pay ASCAP, SESAC and BMI?

OK, by this point you should have a list of all of the songs you intend to play. And you should know whether each song is licensed with ASCAP, SESAC, or BMI. Now you're ready to obtain a license from each of the three organizations.
If none of the songs you want to play are licensed through SESAC, then you don't need a license from SESAC. The same applies to the other two organizations. Just remember that you must do the search again for every new song you add to your stream.
Now that you know how each song is licensed, you're ready to obtain a license from each of the three organizations and start paying them according to their license terms... which, unfortunately, involve minimum fees. These are not outrageous but they may be steep enough to be unrealistic for amateurs. And don't forget, we haven't even begun to look at the sound recording rights issue.

Obtaining a BMI Performance License

Like ASCAP and SESAC, BMI offers licensing for Internet use of their compositions. Unlike ASCAP and SESAC, BMI offers an online licensing account center to help you find the license you need. BMI offers a convenient interactive questionaire to arrive at the correct license for you.

BMI's licensing is substantially simpler and more affordable than the other two. The minimum fee, currently $295 as of this writing, is all you will owe if your annual revenue is under $15,000. If your revenue exceeds $15,000 you still have very reasonable options with BMI, and recordkeeping is also much simpler. These terms are excellent and BMI should be applauded for making the process far less painful. In fact, I recommend the use of BMI music on your website (with the appropriate license, of course).

Although BMI does not currently base its rates on the exact number of music listening sessions that took place, you will still be contacted by BMI and required to report the music listening activity on your website, including both the songs that were offered and how often they were downloaded. So good recordkeeping is essential. But since BMI's rates are not session-based, you should be able to meet these recordkeeping requirements by analyzing your website's log files... provided you keep them, that is. However, if you have built a sophisticated, database-driven music delivery system that makes it impossible to figure out which songs were listened to by looking at the server logs, make sure you build a recordkeeping system directly into your database.

I do have one complaint with BMI: you won't find a link to account.bmi.com on www.bmi.com's main licensing page! Instead you are encouraged to send email... to an address that never responded to me when I previously wrote about this subject.

Why wasn't this information more readily available on BMI's home page? Who knows! Fortunately, the brilliant singer-songwriter Jonathan Coulton knew about account.bmi.com. And when I spotted his hilarious easy-listening cover of "Baby Got Back," I realized he was the man to ask. Thank you, Jonathan Coulton!

Obtaining an ASCAP Performance License

You can obtain an ASCAP license for an Internet radio station from ASCAP's Internet Music License Agreements page.

Actually, there are two types of licenses offered. The difference in price is not great, so it's worth understanding what is permitted by each.

The Non-Interactive License: "Radio" Only

ASCAP's non-interactive license covers websites that function much like a radio station, in that the user can't decide what songs to listen to when, and there is no pre-announced list of songs to be played and when. The minimum annual fee for the "non-interactive" license is $288, as of this writing.

The Interactive License: Music On Demand

Sites that allow users to listen to what they want, when they want, will need to choose ASCAP's "Interactive License." The Interactive license has a minimum fee of $340, as of this writing, and higher rates as well. Otherwise it is quite similar to the non-interactive license, with a similar choice of rate schedules.

The Big Catch: Paying For Music That Isn't Theirs

As of this writing, ASCAP offers a choice of three rate schedules. The first one appears to be the most attractive, with the lowest rates. But read carefully! All three schedules calculate your rate based on your website's revenue, and again based on music listening sessions, with the larger of the two being the amount you owe. But under schedule A, you owe even if the revenue or music listening did not involve ASCAP music in any way!

And under schedule C, you pay only based on revenue or music listening that does relate to ASCAP artists... but the rates are much higher.

Read the fine print and choose carefully!

Recordkeeping Requirements

Notice that the ASCAP licenses require you to keep track of your music listeners and send in regular reports. Good recordkeeping is an absolute requirement.

Whose job is it to figure out that a set of songs were listened to by the same person over a 35-minute period, meaning that only one "session" was involved by ASCAP's definition (as of this writing)? It's your job. And you need to be able to document that and back it up. I suggest handling this by requiring the use of session cookies and refusing access to users whose browsers fail to accept them, bouncing them back to a "please turn on cookies in your browser" page until they turn them on. Then you can safely avoid paying 10 times for 10 song plays that were, in reality, all by the same person in the same hour. PHP is a great tool for this. With PHP you can easily log the start of each song playback to a database along with a session ID.

For more information, see my article how do I keep track of user sessions?

Performance Licensing for SESAC Compositions

Like ASCAP, SESAC offers a standard Internet licensing agreement. You can find that license here. As of this writing, you'll pay a minimum of $101, twice a year. In addition, as of this writing you'll pay $.000604 per "aggregate tuning-hour," or ATH (an hour of listening for a single user). You will pay more if your website offers multiple "components" such as streaming, podcasting and downloading.
Paying for downloads as a "component" through SESAC does not mean you have paid for the mechanical rights. You must do that separately if you are offering permanent downloads!

Note that if 100 users listen to the same stream for an hour, that comes to 100 Aggregate Tuning-Hours.

This web page is not the definitive source of royalty rates for any of these organizations! Read the actual agreements! I accept no responsibility for your failure to do so!

How To Get A License For The Sound Recording

OK, you've paid the license fees for the compositions. But you also owe a license fee to broadcast the actual sound recording (literally, the sounds on the CD).

The ASCAP, SESAC and BMI licenses are private agreements between your company and those organizations. The sound recording license is a "statutory license," which is a little different. Although you owe the license fee to SoundExchange, which acts as a single point of collection for the record companies, you don't sign an agreement with SoundExchange. That's because the license fees for sound recordings are fixed by law.

To find SoundExchange's current Licensing 101 "page," go to SoundExchange and click "Licensing 101" in the right-hand column. I can't give you a link to that specific page because the whole site is written in Flash. Which also makes it hard to Google for. This is extremely bad web design. But I digress.

To legally take advantage of the statutory license, you must:

1. File a "Notice of Use of Sound Recordings under Statutory License" form with the United States Copyright Office. As of this writing, the filing fee (unfortunately not mentioned in the form!) appears to be $20. You can find the notice of use of sound recordings form here on the United States Copyright Office website. If your radio station charges a fee to listen, it's a "new subscription service." Otherwise, it's a "new non-subscription service."

2. Nonprofit organizations may be able to pay lower rates. See the forms available on SoundExchange (go to their home page, then click "Download Forms," then "For Digital Music Services," and look for the relevant year). No, private individuals do not qualify simply because they are "not making any money." NPR (National Public Radio) is a valid example of a noncommercial broadcaster.Your personal dot-com web site is not. If you represent a nonprofit corporation you may qualify.

3. Small webcasters (private individuals and companies who are earning less than a certain level of revenue) were formerly able to file for a special status which won them reduced rates. Unfortunately this is no longer available. So I'm not going to go into agonizing detail. What was previously offered: small webcasters could pay based on their revenues, with a minimum fee of $2,000 a year for the smallest commercial webcasters (and if you're not a nonprofit organization or a school, you're definitely a commercial webcaster). The fees went up considerably from there, and the deal was offered only to companies with a maximum revenue of 1.2 million. But as of this writing, it appears there will be no such arrangement for 2006 and beyond.

The Small Webcaster Settlement Act of 2002 established the principle that reasonable rates based on revenue should be available to small webcasters. Unfortunately, the Act only appears to cover the period ending December 31st, 2004.
4. Pay your royalties. Since the 2006-2010 rate decision was made by the Copyright Royalty Board, rates are much higher for everyone except nonprofit broadcasters. Also, the rate increases every year:
YearRate
2006$.0008 per performance (song playback)
2007$.0011 per performance (song playback)
2008$.0014 per performance (song playback)
2009$.0018 per performance (song playback)
2010$.0019 per performance (song playback)
Apparently, the Copyright Review Board gave the recording industry exactly what it wanted. To such an extreme that the recording industry might be tempted to voluntarily offer lower rates, so that their potential customers are not forced out of business. But don't hold your breath waiting for that to happen.

Noncommercial webcasters will pay $500 per channel (that's a single station offering a single stream of music— if you give people a choice of two "streams" or "loops" offering different music, that's two channels), with a maximum of 159,140 Aggregate Tuning Hours per month. Above that number, noncommercial webcasters pay just as much as commercial webcasters. However, See the SoundExchange site for the forms to file and the official figures.

I Did All That, Am I Done Yet?

Wow, you're still reading? I'm impressed.

If you're still serious about this after reading all of the above, you'll need to check out SoundExchange's payment forms. Visit SoundExchange, click on "Download Forms," click on "For Digital Music Services," and finally click on the relevant form for the year in question.

For more information, be sure to check out the excellent International Webcasting Association website, which offers free legal guides for webcasters.

Share |

Legal Note: yes, you may use sample HTML, Javascript, PHP and other code presented above in your own projects. You may not reproduce large portions of the text of the article without our express permission.

Got a LiveJournal account? Keep up with the latest articles in this FAQ by adding our syndicated feed to your friends list!


Follow us on Twitter | Contact Us

Copyright 1994-2014 Boutell.Com, Inc. All Rights Reserved.