SOCAN Licensing for Business: Laws, Fines, and More

Canada has strict copyright laws that apply to businesses both large and small. If you play music within the walls of your business, you are probably required to pay for each note you play.

One of the organizations that collects those fees is SOCAN. Here’s what you need to know about what this organization is and what it does, so you can protect your business from fines, lawsuits, and more.

The SOCAN Business Model

According to the organization’s website, SOCAN is the largest rights management organization in Canada. SOCAN claims to be connected to more than 4 million “creators” across the globe.

SOCAN is built to collect the fees businesses are required to pay when they play music. Each time you play music in your business, it is considered a public performance that is subject to copyright law. Whether you are playing music from a CD, a record, or a digital playlist, you are playing music in a way that makes it eligible for copyright payments.

For some musicians, fees from SOCAN mean the difference between achieving financial security and worrying about when the next bill comes due. Their connection with SOCAN can provide them with a steady stream of income even if they never create another musical work. Understandably, creators want the fees they have earned. They rely on SOCAN to get those fees for them.

SOCAN is a large company that recently got a lot larger. According to The Globe and Mail, SOCAN purchased a smaller company in July 2018, which allows it to expand its reach even more. At one point, SOCAN only collected music for public performances, such as a CD playing in a store. With the acquisition, SOCAN will also administer the rights for reproductions, such as when a record label makes copies of CDs.

Large companies like this come with a lot of clout, as they have many employees and many stakeholders. Small companies that bump up against SOCAN may feel this at a gut level. This is a company that is not afraid to advocate on behalf of creators.

While SOCAN is a Canadian company, it administers rights for people living all across the globe. Some artists have direct relationships with SOCAN while some other performing rights organizations (PROs) have partnerships with SOCAN in bulk, reducing the paperwork artists must file. This is an important detail to understand. Even if a business never intends to play music generated by Canadians, that business needs a relationship with SOCAN, as this organization handles payments for creators, no matter where they live, for performances that happen in Canada.

There are two PROs in Canada, and SOCAN is only one of them. According to the organization’s website, the other PRO (Re:Sound) has a slightly different business model. Where SOCAN represents composers, songwriters, and publishers, Re:Sound represents artists and record companies.

Put another way, SOCAN represents people who have the ideas that are preserved in music. Re:Sound represents the people who bring those ideas to life. Both of these parties participate in the creation of recorded music, and both have copyright benefits associated with their work. Both sets of parties expect payment and are entitled to payment under Canadian law.

This means most Canadian businesses will need a relationship with both PROs in order to have full coverage. Partnering with just one will leave you unprotected from claims by the other set of participants.

SOCAN Flexes Its Muscle

While SOCAN has a legal right to collect fees on behalf of its members, it isn’t unusual for business owners to avoid payment. Some aren’t aware that the way they use music is subject to Canadian copyright law, and others don’t feel as though they have the money to pay the fees they owe.

According to The Hamilton Spectator, SOCAN has 50 people on staff who search for businesses playing music they have not paid for. SOCAN representatives may scour websites, looking for proof that these companies are using music in an unprotected manner. SOCAN representatives may simply walk into a business and listen for music playing. Since most businesses have at least some aspect that is open to the public, it is hard to keep representatives from visiting if they choose to do so.

The Hamilton Spectator reports that SOCAN got approval in 2013 to go after these businesses:

• Gyms
• Strip clubs
• Concert venues

People who own these businesses quickly learned how SOCAN works and how the company generates the fees members expect. The SOCAN approach can be hard on business owners. People told reporters in this article that they got letters frequently and had phone calls come to them two or three times per week, demanding payment. Some business owners said this approach was akin to harassment.

In a blog post published by Hastings Crossing, the authors post a letter that came from SOCAN, and on first glance, it seems reasonable and even friendly. There is information about why a company should pay, and there are quotes from business owners and artists talking about their decision to work with SOCAN. It all seems appropriate./

Fees are not exorbitant. In an article in The Globe and Mail, reporters suggest that the fees due from the owner of a small record shop would add up to about 30 cents per day. But those who do not pay can be sent to collections services where fees can be compounded. Businesses can also be taken to court for damages.

Avoiding the Fees Rarely Works Out

Avoiding the fees rarely works out, as the company will continue to press until fees are paid.

Don’t Break the Law

If you play music within the walls of your Canadian business, you are required to pay fees for that music. This is an edict built right into Canadian copyright law, and it cannot be avoided. If you do not pay a fee, you are breaking the law.

But SOCAN’s fee structure can be confusing, and you will need to negotiate yet another contract with the other Canadian PRO. That can mean a great deal of paperwork and contracts for you, and you might get hounded by both companies each time your contract comes due.

SOCAN contracts are typically delivered yearly with one fee that allows you to play music from the entire library. But when the year is up, you will need to answer questions about your business, your location, and use of music. If you do not notify SOCAN of a change that happened the year prior that affected your use of music, the company could charge you back fees.

We offer another way. At CloudMusic, we have an entire library of music that is appropriate for businesses like yours. We offer contracts that are clean and easy to understand. In our model, you will not need to form another relationship with another PRO. With one contract with us, you will be in compliance with the law.

We would like to tell you more about how our business works. Please contact us to find out about our contracts, our pricing, and our free trial offer.

SOCAN Licensing for Business FAQs

Who needs a SOCAN license?

Businesses in Canada that play music should have a license with SOCAN. The organization protects the rights of composers, songwriters, and publishers.
Anytime their work is played publicly, including inside your Canadian business, they are entitled to a small fee. SOCAN makes this possible.

How much does a SOCAN license cost?

SOCAN fees are detailed and a little confusing. The organization determines how much you’ll pay based on the size of your potential audience, your revenue, and more.
Different fees apply for recorded music vs. live music. In general, it’s best to contact the company and ask how much you’ll pay. 

How do you license music for commercial use?

As a business owner, you’re not required to license music for commercial use. You’re not a content creator in this instance. You are, however, required to respect another entity’s license. 

By working directly with SOCAN or a company like Cloud Music, you’re ensuring that you’re playing licensed music legally.

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