Blanket License

In-Depth Explanation

What is a Blanket License?

In the music industry, a blanket license is an agreement issued by a Performing Rights Organization (PRO)—such as ASCAP, BMI, or SESAC in the United States, or PRS in the UK—that gives the licensee the right to publicly perform any and all of the musical works in that PRO's massive catalog for a set period of time, usually a year.

Without a blanket license, a business that plays music publicly (like a radio station, a sports stadium, a nightclub, or even a local coffee shop) would have to track down the individual songwriters and publishers for every single song they play, negotiate a fee, and sign a separate contract. Given that a typical radio station plays thousands of different songs a year, individual licensing is practically impossible.

The blanket license solves this problem. A business pays one flat annual fee to the PRO, and in return, they get legal permission to play millions of songs.

Who Needs a Blanket License?

Under U.S. copyright law (and similar laws worldwide), any "public performance" of a copyrighted musical composition requires permission from the copyright owner. Therefore, a blanket license is required by:

• Terrestrial Radio and TV Stations: The original and still massive users of blanket licenses.
• Live Music Venues: Clubs, arenas, and stadiums hosting concerts.
• Streaming Services: Spotify, Apple Music, and Pandora pay blanket licenses to PROs for the composition performance rights.
• Retail and Hospitality: Restaurants, bars, hotels, gyms, and retail stores playing background music.
• Digital Platforms: YouTube, TikTok, and Instagram hold massive blanket licenses to cover the user-generated content on their platforms.

Note: If a small business plays the radio or a TV in their store, they may be exempt under specific legal exemptions (like the "Homestyle Exemption" in the US), but playing Spotify from an iPad or hiring a DJ requires a license.

How Much Does a Blanket License Cost?

There is no single price for a blanket license; the cost is heavily negotiated and depends entirely on the size and nature of the business. PROs calculate the fee based on factors such as:

• Revenue: A percentage of a radio station's advertising revenue or a streaming service's subscription revenue.
• Audience Size: The seating capacity of a concert venue or stadium.
• Usage Type: Is the music the main attraction (a nightclub with a DJ) or just background ambiance (a dentist's office)?
• Square Footage: The physical size of a retail store or restaurant.

A small coffee shop might pay a few hundred dollars a year, while a major television network or a platform like Spotify pays hundreds of millions of dollars annually.

How Do Songwriters Get Paid from Blanket Licenses?

When a PRO collects millions of dollars in blanket license fees from thousands of businesses, they must figure out how to distribute that money fairly to the songwriters whose music was actually played.

Because it's impossible to track every single song played in every single bar in the country, PROs use a combination of census (exact counting) and sampling (statistical estimation):

1. Census Data: Digital platforms (Spotify, Apple Music) and major TV networks provide exact data logs detailing every single time a song is played. This allows for highly accurate, pro-rata distribution of those specific fees.
2. Sampling: For terrestrial radio, live venues, and retail spaces, PROs use statistical sampling. They use digital monitoring technology in major markets, require venues to submit setlists (for live shows), and use data modeling to estimate what is being played nationwide.
3. Distribution: The PRO deducts their administrative operating costs (usually 10-15%) and distributes the remaining money to the songwriters and publishers based on the census and sampling data.

Blanket Licenses vs. Direct Licenses

While blanket licenses are the standard for public performance, they do not cover synchronization (using music in a movie or ad) or mechanical rights (manufacturing CDs or digital downloads).

If a TV show wants to use a specific song in a scene, the network's blanket license covers the broadcast of the show, but the producer still needs to negotiate a direct Sync License with the publisher to legally place the music into the video file.