Royalty-Paid Music
	Non-Royalty Paid Music
	The Law
	The Penalties
	What is a Copyright?
	Licenses and Royalties, and How They Work
	How Licenses are Granted and Royalties Collected
	Enforcement

Royalty-Paid Music
Unlike music played over the radio or any other store-bought music, the music contained in every Message On Hold program from the On Hold Network is royalty-paid throughout the term of your subscription. That means no other royalties are payable to us or any other third-party music licensing agency such as ASCAP or BMI.

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Non-Royalty Paid Music
Music that you receive over the radio, or contained on a consumer medium (such as store-bought CD or cassette) is generally intended for private use only, and is NOT licensed for commercial use, rebroadcasting, or public performance.

Should you wish to play a radio or some other form of non-licensed music over an on-hold system, the following applies:

The Law
By statutory definition, since a corporation or other company is a place 'where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered,' (17 U.S.C. SECTION 101) it is a public place for copyright purposes. Whether the performance is by the playing of a CD or tape, by a radio tuned to a particular station, or via music-on-hold (which constitutes a public performance by virtue of its being a transmission to the public), permission (called a 'license') must first be obtained in order for the use of that music to be lawful, and a fee (called a 'royalty') must be paid for such use.

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The Penalties
Under U.S.C. TITLE 17, the law allows copyright owners to receive as damages for infringement between $500 and $100,000 for each work infringed. Moreover, a corporate officer who has the right or ability to supervise the company's music use and who has a direct financial interest in the corporation can be held personally liable for the infringement.

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What is a Copyright?
A copyright is merely a legal right to commerically exploit an artistic or creative work -- in other words, to make money from it. Sometimes, the person who wrote, composed, or otherwise created the work is the copyright holder. However, in the professional music world, the copyright is usually held by a music publisher who has the contacts and resources to market and distribute the music, to license it for various purposes, and to defend their rights under the copyright laws.

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Licenses and Royalties, and How They Work
Think about how many pieces of music you hear in a day. Besides music on the radio, or from your own personal collection, you hear music on commercials, movies, TV shows, videos, web sites, corporate presentations, and even while you are on hold. The point is, music can be used for all kinds of different purposes.

A license is merely a legal permission from the copyright holder (or from a third-party that represents a copyright holder) to use a musical work. A royalty is the money paid by a user to obtain the license.

Licenses are usually granted for specific uses only, and often grant that permission over a specific, finite time frame. The royalty amount can vary drastically, even for the same musical work, depending on the specific licensed use. The royalty to broadcast a piece of music once on the radio may only be a few dollars. The royalty to use that same piece of music in a Message On Hold program would be significantly more. If a producer wanted to use that piece of music in a TV show, that royalty may be several thousand dollars!

At the On Hold Network, we maintain a musical library of over 6,000 titles, and purchase licenses in bulk from the publishers of this music for use specifically in Message On Hold programming. When you purchase a Message On Hold Subscription, part of your investment covers the royalties to use that music over your on-hold system during the subscription term, without you having to hassle with the legal details involved.

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How Licenses are Granted and Royalties Collected
Sometimes, licenses are granted directly by the copyright holder to the end user, especially for expensive, complex, or high profile uses, like using a piece of music in a movie or in a national advertising campaign.

But for more general purposes -- like radio broadcast, overhead sound systems in a store, hotel, or elevator, or music and message on hold systems -- dealing one-to-one like this just isn't feasible. Obviously, there are hundreds of thousands of copyright holders out there, millions of musical works, and thousands of companies who use music commercially every day. Because of this, songwriters, music publishers, and other musical rights owners belong to a group who monitors and handles these transactions on their behalf.

In the United States, there are two such organizations -- Broadcast Music, Inc. (BMI) and the American Society of Composers, Authors and Publishers (ASCAP). These "performing rights organizations," as they are formally known, represent the writers and publishers who own the copyrights. It is their job to protect the interests of their members by granting licenses, and collecting and distributing royalties.

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Enforcement
ASCAP and BMI employ a small army of people whose sole job is to call businesses and get placed on hold.

On the first call, if a business is found to be in violation by playing a radio broadcast or other unlicensed music source on hold, that business is offered the opportunity to purchase an annual license which brings them into compliance. Violators who refuse to purchase the license are formally warned that they are in violation of copyright laws, and that they must cease and desist playing the radio or unlicensed music source.

Users who remain in violation and/or are caught in violation a second time may receive substantial monetary court judgments against them. Most judgments attempt to recover previous licensing fees that can go as far back as from the time the business began operating.

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