How Pandora and Spotify Work
Pandora and Spotify work similar to other music distribution services by paying royalties and licensing fees to recording artists, musicians, bands, groups, singers, and songwriters in exchange for collecting a monthly flat fee from consumers/customers of the service. Pandora and Spotify vary in their business models, but basically, they run their business by either charging the customers through paid subscriptions or selling advertising.
What It Means to Play Pandora or Spotify Over the Air Within Your Business
The U.S. Federal Copyright Act provides owners or authors of copyrighted music special protection and exclusive rights to the music including public performance of that music. Playing their music in your business through one of these services can be considered a “public performance,” which is generally not within the license that is provided by Pandora or Spotify. Depending on your business use of the music and your subscription, you may be liable for copyright infringement. Generally, artists whose music plays on Pandora or Spotify have their music owned by the respective record labels. The record labels own all of the “masters” or “master recordings” of the music. This means that the Artist does not own their own music recordings – only the rights to royalties to them. So, if a legal claim were to be brought, it would be brought by the record label, not the Artist.
Pandora and Spotify Both Bar Public Performances of Streaming Music
Pandora hereby grants to you a limited, revocable, non-exclusive, non-transferable, non-sublicensable license to access the Services in an Authorized Jurisdiction, and otherwise view and use the Services to the extent permitted by its intended functionality, for your own individual personal, non-commercial purposes and not for the sublicense to or use by third parties.
The Spotify Service and the content provided through it are the property of Spotify or Spotify’s licensors, and we grant you a limited, non-exclusive, revocable licence to make personal, non-commercial (except as permitted under Section 11) use of the Spotify Service and to receive the media content made available through the Spotify Service in your Local Country, based on the Subscription or Trial, you have selected (the “Licence”).
The phrase “personal” and “non-commercial” bar the streaming music to be played at work, at the workplace, in bars, restaurants, nightclubs, offices, or other locations. In a nutshell, you can’t stream Pandora or Spotify music at the workplace because it violates the license and is considered a “public performance.”
If you find yourself in a copyright infringement lawsuit by playing Pandora or Spotify in your business, you can try to argue your situation falls under the homestyle exemption. This exemption, originally for the am/fm radio broadcasts, protects those who are merely playing the radio within their relatively small business space and customers may hear it. This exemption was really meant for the old fashioned radio broadcasts to protect those who are using the radio for private use, but sometimes they may inadvertently play the broadcast to patrons nearby and shouldn’t be punished for that. It’s not exactly the same as internet radio especially if you purposefully playing it to your customers, but you could make this argument that playing Pandora or Spotify is a similar situation.
Where you are playing Pandora or Spotify could make a difference. It is one thing if the music is played in the break room, away from the public, but it’s another, if you play it over your store surround system all day long for all customers to enjoy. If you are the latter, you may need to consider forking up licensing fees to avoid violating copyrights.
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