The Homestyle Exemption: Music in Restaurants and Small Venues

We’ve all been in these situations: in elevators, in restaurants, waiting on hold. One salient aspect of these situations is the background music constantly playing over hidden speakers, adding a touch of ambience to an otherwise droll experience (to the extent that waiting on hold can be made less droll). How does copyright work in these situations? Is a restaurant exposed to legal liability for playing copyrighted music without permission, like turning on the radio over the speakers? What if a hotel’s ballroom is rented out for a concert: does the hotel have a legal obligation to look over the set list and make sure the performers received adequate permission from the copyright holder? What about elevator music, or hold music?

So, the starting point is that music is, generally speaking, copyrighted, which means you can’t play it in a public venue without the copyright holder’s permission. (You may remember buying CD’s back in the day and noticing some sort of messaging on the case about how it was only being sold for private use.) This is true even if a restaurant owner purchased the song, subscribes to a music streaming service like Spotify or Apple Music, or is replaying a digital radio station like Pandora. All of these are licensed for private use, but not retransmission to the public.

However, the U.S. Copyright Act, enacted in 1976, provides an exception to this rule that allows certain smaller establishments to play said music without seeking permission from the copyright holder.  This exception, known as the “Home-Style Exemption,” allows for the public airing of radio and television broadcasts in public-accommodation establishments, such as bars and restaurants, without the risk of being sued for copyright infringement. Here is the pertinent language from  the Act:

“The following are not infringements of copyright:

…

(ii) in the case of a food service or drinking establishment, either the establishment in which the communication occurs has less than 3,750 gross square feet of space (excluding space used for customer parking and for no other purpose), or the establishment in which the communication occurs has 3,750 gross square feet of space or more (excluding space used for customer parking and for no other purpose) and–

(I) if the performance is by audio means only, the performance is communicated by means of a total of not more than 6 loudspeakers, of which not more than 4 loudspeakers are located in any 1 room or adjoining outdoor space; or

(iii) no direct charge is made to see or hear the transmission or retransmission;

(iv) the transmission or retransmission is not further transmitted beyond the establishment where it is received; and

(v) the transmission or retransmission is licensed by the copyright owner of the work so publicly performed or displayed”

17 U.S.C. § 110.

In other words, a small restaurant may play music without first obtaining a license—but only if it’s really small. A U.S. Supreme Court case, Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975), held that the owner of a fast-food establishment, who turned on the radio at the beginning of the day and connected that radio into a “home-style” speaker system with four speakers around his restaurant, was allowed to do so, as such rebroadcasting was not considered a public performance. However, this case represents the outer bounds of the rule: as the Committee Notes to the Act clarify, when a store owner installs a special sound system for that purpose, the owner would lose the exemption. Hence, the carve-out is limited to the facts of Aiken: where a mom-and-pop shop owner brought their boombox to work and turned on the radio and connected it to a small speaker system in the store.

Barring those circumstances, however, most venues playing the radio will need to obtain some sort of licensing first to avoid copyright infringement. This ensures that musicians receive some compensation for their work. Practically speaking, that means subscribing to a performing rights organization (“PRO”), which acts as the middleman between the restaurant and the artist. (You may theoretically request permission directly from the artist/producer, but most musicians work through PRO’s.) Moreover, even “hold music” (music played during a telephone hold) needs to be licensed, which is why it tends to be so boring—the companies aren’t even playing the radio, but a small number of preselected licensed songs. See Prophet Music, Inc. v. Shamla Oil Co., 1993 U.S. Dist. LEXIS 7839 (D. Minn. Jan. 27, 1993).

There are three main PROs in the industry: ASCAP, BMI, and SESAC. A quick visit to each of their sites will show how their subscription plans work: they create a schedule based on factors such as the type of venue, number of locations, and type of music desired. Fees can range from several hundred dollars a year to several thousand.

Copyright owners the exclusive right to publicly perform their works under the U.S. copyright laws.  This means that restaurants and bars generally need permission or a license from a PRO to play music over the speakers unless the Homestyle Exemption applies.  If you own a restaurant or small business, make sure to seek legal advice before broadcasting the radio over the speaker system to determine if permission must be obtained.  Fees paid to PROs may amount to only a few dollars a month and protect you from liability for copyright infringement in the long run.

Written by AJ Esral, Esq. The information contained herein is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this blog should be construed as legal advice from Shumaker Williams P.C. or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. This blog is current as of the date of original publication.