Last weekend my family and I went into an ice cream parlor. We enjoyed the music coming over the stereo — a great mix of 70s funk and soul — almost as much as the ice cream. Then the music was interrupted by a commercial. I didn’t notice what it was a commercial for, but I did notice that the ad copy started with, “Hey Pandora listeners!”
Oops. It turns out that playing Pandora in a public space, like a cafe, bar, or restaurant, is a violation of Pandora’s terms of service.
The folks in Pandora-land (a/k/a Oakland, CA) ought to view this as an opportunity. I’m sure many stores do what this ice cream shop did and wouldn’t mind paying a nominal fee for the performance rights required. This can only be a plus for both Pandora and music licensors.
Wait a minute: doesn’t Muzak already do that? Yes, they have for decades — and they see the threat coming. The company declared bankruptcy last year. It has been trying to diversify into other areas, such as store signage, sound systems, and in-store announcements.Muzak offers a few dozen music channels, a pittance compared to satellite radio, let alone the infinite variety and serendipity of Pandora (or Slacker, etc.).
In fact, Sirius XM satellite radio already offers this type of license. XM for Business partners with PlayNetwork, a Muzak competitor, to deliver its offering to stores, including some major retail chains.
Muzak is, perhaps, a dark corner of the music industry about which few people think seriously. Maybe it’s about to get darker yet.
Copyright and Technology 
I’m Brittany, from Muzak, and I had to chime in.
The above post dramatically oversimplifies laws about licensing music for public performance, which doesn’t seem fair to your readers.
The above post also misstated facts about Muzak. You discuss our 2009 Bankruptcy, but don’t mention that Muzak fully Emerged from Bankruptcy as a stronger company in Jan. 2010. You’re only telling your readers half of the story.
You also misrepresented our product offering. Muzak’s nearly 3 million original artist tracks are hardly a ‘pittance’. We offer nearly 100 satellite music programs and completely custom programs lovingly built by our Audio Architects– and all are commercial free. Competitors like XM can’t offer that.
Muzak is comprehensive where others cut corners. We deliver music via IP, Satellite or physical DVD. We staff 200 service locations for rapid service response nationwide. We combine music, voice messaging, Digital Signage, Pro Sound systems, scent and more to custom tailor solutions as unique as our clients.
If you think Muzak is in a dark corner, it’s time to think again.
For more information, follow us @MuzakLLC on Twitter.
Brittany,
Thanks for posting.
Point taken about Muzak’s re-emergence from Chapter 11. And you’re right about my oversimplification of performance rights. It’s not so much a question of laws, though – it’s a question of making the effort required to acquire those rights. My article was in part meant as a wake-up call to the music collecting societies and rightsholders who (partially their own fault, partially the result of statutory licensing) make it more difficult to acquire these rights than it ought to be. In fact, my guess — and it’s just a guess — is that the smart folks at Pandora have already looked at this space and decided not to bother because it’s not worth the effort and/or their core business is growing more than fast enough.
However, as for the rest of it: your 100 “lovingly built” music programs are a poor match for the millions of custom radio stations just as lovingly built by a combination of custom radio services like Pandora and Slacker (the latter having access to far more than 3 million tracks) and their users.
And really, come on – what percentage of your customers actually don’t have Internet connections? (I’m not talking about the ones who continue to subscribe to your DVDs out of inertia.)
You ought to be looking to harness the power of crowdsourced custom music, not continue to fight the losing battle against it. In other words, you ought to be looking to strike the same kind of deal with Pandora as PlayNetwork made with XM.
I am curious though, in this example you talk about a small ice cream parlor. They should be exempt to the in-store performance licensing requirements, no?
Not according to Pandora’s terms of service:
“Pandora is for personal use only, that means you can’t play Pandora for the patrons in your bar, coffee shop, etc.”
My understanding is that “store” is not the same thing as “bar, coffee shop, etc.” because the latter are places where customers sit down and get something tantamount to an entertainment experience.
I agree that it doesn’t comply with Pandora’s terms but the 1998 fairness in copyright act and such exempts them(small establishments) from liability.
See, e.g., the decision in Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975), which was essentially codified in Section 110(5) (owner of a small food establishment exempt from infringement liability for the performance of copyrighted works via a radio and four small ceiling speakers).
scroll down to section 5 here for the law:
http://www.law.cornell.edu/uscode/html/uscode17/usc_sec_17_00000110—-000-.html
the real question is whether pandora could obtain the necessary licensing to provide such a service.
Came across this http://www.dmx.com/pandora/why-pandora-for-business/