Restaurants and bars are tired of paying the piper

A growing number of businesses in the hospitality sector are singing the blues over rising costs associated with playing music at their establishments.

These groups—including the National Restaurant Association, American Hotel & Lodging Association, and MIC Coalition (covering small businesses)—have made their gripes known in public comments submitted as part of an ongoing federal review of music licensing companies, according to a new Bloomberg report ($).

In need of a bar rescue

Setting up music for a restaurant, hotel bar, or yoga studio isn’t as simple as breaking out the aux cord and putting on a Spotify playlist. Every song played at a venue must be licensed and have royalties paid to the songwriter(s), or risk being sued.

The licensing industry remained largely unchanged for decades leading up to the mid-2010s, with three main organizations representing singers and songwriters. But the rise of streaming has led to a surge in revenue, and spawned a handful of new companies looking to cash in.

• There are currently a half-dozen major music licensing firms in the US, up from three such groups a decade ago.
• Each org demands that bars, restaurants, hotels, and other venues pay them fees—typically a blanket licensing agreement covering all their content—or risk legal fines of up to $150,000/song.

These costs can add up…The National Restaurant Association says its members pay an average of $4,500/year to license music, or 0.5% of the average US small restaurant’s total annual sales—a significant amount for an industry that runs on an average pre-tax margin of 3%-5%.

…and they’re only getting higher: The American Hotel & Lodging Association cited a “major global hotel chain” who saw its music fees rise by ~200% from 2021-2025.

Looking ahead: The US Copyright Office will submit a report to Congress in the coming months outlining its recommendations for what changes, if any, should be made to the music licensing industry.