Trendy Coffee Shops Are Ripping Off Millions of Dollars from Indie Musicians

For the past several years, I have worked from home, which is more-or-less a way of implying that I’m one of the d-bags with a laptop monopolizing the wall outlets at your favorite coffee shop. I’ve spent enough time at that place to become intimately familiar with the owner’s musical tastes, which include Tame Impala, Drake, and the most ironic four-minute track in Toto’s entire back catalog.

But it turns out that many indie coffee shops like that one—along with restaurants, bars, hotels, hair salons, retailers, and countless other small businesses—are seriously short-changing Tame Impala, Drake, and any other artists they might play.

According to a study published by Soundtrack Your Brand, a music licensing service, and Nielsen Music, the number of businesses playing improperly licensed music is costing the music industry an estimated $2.65 BILLION in revenue. So what constitutes improperly licensed music? It’s using a personal account on a streaming service in a business setting, like if your barista’s afternoon soundtrack is coming from her own personal Spotify account, or if the bartender plays Apple Music during Happy Hour.

To ensure that artists, composers, songwriters, producers, and others are appropriately compensated, businesses are supposed to be licensed separately, but “supposed to be” are the key words in that sentence: according to Soundtrack Your Brand, only 17 percent of the businesses they surveyed had obtained that license.

“Business licenses give music creators fair, and typically much higher, compensation when their music is used to benefit commercial activity,” Soundtrack Your Brand explains in its research. “Consumer streaming services don’t include those rights and that’s why they aren’t allowed to be used in places of business. Their Terms of Use clearly state this.”

Soundtrack Your Brand commissioned Nielsen to interview the owners of almost 5,000 small businesses in the United States, the United Kingdom, Sweden, Spain, Italy, Germany, and France. (And it focused purely on small businesses, not those that are part of “bigger enterprises,” like McDonald’s or Subway.)

Almost 90 percent of those businesses reported that they played music in-store or on-site at least four to five days each week, and more than 40 percent of them said that music was “very important” to their business. (Personally, I don’t even know how a Flat White would taste without “The Less I Know The Better” playing overhead.)

But when it comes to how they’re playing that music, the results are pretty grim… because almost all of them are doing it not-so-legally. Eighty-three percent of the respondents used a personal music service like Spotify or Apple Music instead of using a music service that is legal for business use. According to this research, the music industry loses $11.96 per month from every business that streams a free music service, and $8.33 per month from every one that has a paid subscription to a streaming service. With 21.3 million businesses using these services globally, that adds up to $2.65 billion in losses annually.

When those results are broken down by country, the United States is one of the worst offenders. Seventy-one percent of our business owners “incorrectly believe” that having a personal music account makes it OK for them to play for their customers; only Spain (75 percent) had a higher percentage of improperly streaming business owners. (Italy was the best performer when it comes to proper compensation, as 50 percent of business owners either have the correct license or know that they cannot stream music without it.)

“The music industry at large needs to do better to educate,” Andreas Liffgarden, Soundtrack Your Brand’s chairman and co-founder, told Rolling Stone. “You instinctively know that you can’t use your Netflix account and open a cinema—you’d surely roll your eyes and say, ‘of course I knew that’—but the same isn’t true for music. In the TV and movie industry, it’s almost taken for granted. But in music, aside from large brands who always comply, the educational journey hasn’t happened.”

Liffgarden believes that the next move will be for businesses to have their own streaming music services, which presumably would include the cost of a proper license in their subscription fees. Either way, I’d like to propose a ban on Tame Impala.