According to a Nielsen Music study commissioned by Soundtrack Your Brand, the music industry has lost out on $2.65 billion annually because small businesses use consumer services globally resulting in unfair compensation for music creators.
The study focuses on businesses across seven music markets on two continents: US, UK, Sweden, Spain, Italy, Germany and France. The report states that most small businesses that play background music also use streaming. This wrongful use of personal streaming subscriptions benefits the business but since the music subscription was never designed for commercial use, the music makers get paid less money than they ideally should.
Business streaming licenses are quite different than the personal ones. Business licenses give music creators fair and higher compensation when their music is used to benefit commercial activity. Consumer streaming services don’t include those rights and that’s why they are not allowed to be used in places of business. The report points out that 83% of the small businesses who play background music use personal services, while only a meagre 17% used music services legal for business.
Music, in any form, helps in creating an ambience which appeals to the customers that in turn benefits the businesses. As per the report, 88% of the small businesses play music daily or at least 4 to 5 days per week and the other 12% play music less than 4 days per week. Also, all businesses claim that music is a key to their commercial activity. 42.8% of the businesses agree that music is very important to them, 37.5% claim that music plays a vital role, while 19.7% deny the importance of music in their commercial gains.
When asked the businesses who use music for conducting their commercial activities, 86% were willing to pay for the commercial license and 14% denied to pay up for the services. Most of the business owners incorrectly believe that a personal music account gives them the right to use it for background music at their place of business.
“Lack of innovation has driven small businesses to choose consumer services, as they are far more accessible and easy-to-use than most business alternatives. We need a new generation of B2B streaming services, attractive to business owners, that make sure music makers get fair compensation,” said Andreas Liffgarden, Co-founder and Chairman of Soundtrack Your Brand.
While the West faces its own struggles to get businesses to comply to the copyright laws, the struggles in the developing nations are even graver. In the Indian music market, getting businesses to comply with the copyright laws has always been a hassle.
“It is great that such a report came to light. If the number is so high in the developed countries then it’ll be multi-fold in a country like India. Now we have a yardstick and we will be working towards making the music creators aware of these rights. It is their hard work and they should be compensated for it,” said Rajat Kakkar, Managing Director, Phonographic Performance Ltd (PPL), India.
“Big hotels who have businesses outside India understand that it is necessary to adhere to the copyright laws. We experience maximum compliance from the hotel industry. Even corporate offices who use ambient music too follow the copyright laws. But smaller establishment do flout these laws. The challenge is bring restaurants and small businesses to comply with the copyright laws.”
When asked about the solution to fix the problem of copyright infringement, Kakkar opined,
“PPL is trying to make the process of acquiring commercial licenses online which will make it easier for businesses to comply with the laws. Also, another way is to work along with restaurant and small business associations to streamline the commercial licenses.”
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