By Kenneth Yardy, Special Counsel, HTA Legal
There is a long history of copyright owners taking venues to court for breaching the Copyright Act and not paying royalties to the copyright holders.
Hotels, like a lot of entertainment, food and retail venues are about the music they supply and broadcast to enhance the customer experience for a commercial activity. Most hotels play music in their venues because it works. It creates a better experience, provides differing entertainment, prompting longer and more regular stays and spends by customers. But just as a hotel requires a liquor licence and an entertainment licence or approval, licences are required for the ‘public performance’ of music.
Buying the music by way of purchasing a CD, vinyl, rebroadcasting or a download is not enough. These only allow private use and enjoyment, not public performance. The standard Spotify or Apple Music terms of agreement don’t license you for business purposes, just personal use.
It’s all about copyright law and the payment of royalties and licence fees to those that wrote, composed or played the music. Just as you can download a movie, you cannot set up a fee-paying public theatre; you can’t run a hotel by using your Spotify playlist. It’s called copyright infringement and there is a long history of copyright owners taking venues to court for breaching the Copyright Act and not paying royalties.
Copyright collection agencies such as OneMusic Australia (you may know them as APRA, AMCOS & PPCA) have been around for over 50 years. They issue licences (there are over twenty of them) based on payment of a tariff, depending on the type of music used, whether it be live (generally 2.2% of the performance fees paid) or recorded, on a dance floor (about $2 per person per day offered) or in a dining area or even on your website. It is also assessed on the number of TV screens you have. A venue’s only alternative is to either use music outside the collecting agencies (such as music known as ‘royalty free’ or public domain music) or entering agreements with every copyright holder, if that were possible.
Attempts to avoid the licence fees are fraught with danger. You may be able to buy background music from a background music supplier, but those suppliers would need to have purchased a licence including the commercial use by your business. Some hotels have attempted to avoid the fees by hiring out their venue to promoters or bands on an irregular basis and expecting them to have the appropriate licences. The courts haven’t agreed with the venue operators, as the occupiers are responsible under the Copyright Act and the venues have been forced to pay back licence fees for several years, long after the promoters were gone.
If you are taken to court for not holding a licence and playing unauthorised music, there is a bit of a ‘triple whammy’ as you can be held liable for the following if you breach the law:
- Compensation for the amount that you should have paid in the Licence Fee over the time.
- Penalties under the Copyright Act (up to $60,500 if you are an individual and $302,500 if you are a corporation)
- The Legal costs of running the matter at court.
The fact is, if you use someone else’s music, you need the appropriate licences. It’s always cheaper to pay up front, get a proper licence and avoid lawyers and courts!
This advice is provided by Kenneth Yardy of HTA Legal Pty Ltd, an arm of the Australian Hotels Association (NSW). The advice supplied is only general in nature and cannot be relied upon individually as it not an exhaustive review into the applicable law in this area for your circumstances. You should contact your legal advisor for individual advice.