Personal music streaming in commercial premises loses music industry $2.65 billion annually according to background music company Soundtrack Your Brand, who commissioned Nielsen Music to conduct the largest-ever international study into background music.
The study shows that composers, artists, and musicians may miss out on an estimated $2.65 billion annually because businesses misuse personal music services in commercial settings (with most small businesses unaware they breach licensing regulations). The study estimates that rights holders miss out on $888 million annually in the US and £114 million annually in the UK.
Nielsen Music estimated the size of the global market of small businesses with a physical commercial location to be 29.4 million organisations (including retailers, restaurants, hairdressers and hotels). The study estimated that a potential 21.3 million of these businesses use personal (B2C) services for background music, instead of a properly licensed B2B music service. Among small businesses with 10 or fewer employees, it is estimated that globally, 83% breach licensing regulations in this way. The study estimated the valuation for the global background music industry as $12.3 billion annually.
Soundtrack Your Brand commissioned the study to highlight a perceived problem in the music industry, where streaming services – which have drastically reduced consumer music piracy consumers – have failed to guide businesses towards correctly licensed background music services.
Soundtrack Your Brand also believes the distinct lack of innovation among background music providers has led businesses to continue using consumer services, resulting in the ongoing prevention of music makers from receiving fair, and typically much higher compensation for when their music is used for commercial purposes.
Based on in-store interviews conducted by Nielsen Music with nearly 5,000 small business owners across the US, UK, UK, Sweden, Spain, Italy, Germany, and France, the study found:
- An average of 83% of small business owners in these countries pay for and use a personal music service in a commercial setting.
- 71% of small business owners in the US incorrectly believe they can legally use a personal B2C music service in a store.
- 60% of small business owners in the UK incorrectly believe they can legally use a personal B2C music service in a store.
- Nearly a third (31%) of small business owners in the UK did not have a license to play background music, or were unsure whether they did.
Andreas Liffgarden, Soundtrack Your Brand Co-founder & Chairman, comments: “This study should be a wake-up call for the music industry. Music makers are being shortchanged without knowing it. Consumer streaming companies have millions of customers who are actually businesses, who may be unknowingly misusing their services and not paying music makers the money they are entitled to, which is potentially in the billions of dollars.”
Soundtrack Your Brand provides bespoke solutions for streaming music to stores, hotels, restaurants and other commercial settings and includes McDonald’s, Tag Heuer and Adidas amongst its customers. In April 2018, the company announced transatlantic licensing deals with hundreds of rights holders including Sony/ATV Music Publishing, the world’s largest music publisher, expanding its catalogue to over 40 million tracks.
