If you run a business that plays music — a restaurant, a shop, a hotel, a gym — you have probably received invoices or letters about "music licensing" and wondered what exactly you are paying for. The system is old, it has layers, and it can feel confusing. This article walks through it in plain language, without taking sides.
The basic idea behind music licensing
When music is played in a commercial space, the authors and performers who created it have a right to be compensated. This is not a peculiarity — it is the same principle that applies to any creative work used in a commercial context. The mechanism by which that compensation is collected and distributed varies from country to country, but the underlying idea is consistent across Europe and most of the world.
In practice, most countries have what is called a collective management organization (CMO), sometimes also referred to as a performing rights organization (PRO). These organizations represent large groups of authors and composers, negotiate licensing rates with businesses and broadcasters, and distribute royalties back to the rights holders. In Italy the main one is SIAE, in Germany GEMA, in France SACEM, in the United Kingdom PRS for Music, and in the United States there are several (ASCAP, BMI, SESAC).
Two separate layers of rights
One thing that surprises most business owners is that there are often two distinct rights at play when a recorded song is performed publicly:
- Composition rights — the rights of the songwriter and composer, which belong to the author of the song itself.
- Sound recording rights — the rights of the performer and the label who produced the specific recording of the song.
Depending on the country and on the type of music used, these two layers may be collected by the same organization or by different ones. This two-layer structure is one of the reasons the system can feel complicated to navigate, especially for small business owners who would prefer a single, simple answer.
Direct licensing: an option formally recognized by European law
Alongside the traditional collective management model, European law explicitly recognizes a second option: direct licensing. Under EU Directive 2014/26 — implemented in Italy through Legislative Decree 35/2017 — rights holders and independent licensing operators can license their works directly to businesses, outside of the traditional collecting society model.
What direct licensing means in practice
A producer creates original music, owns the rights, and grants a license directly to the business that wants to play that music in its venue. The license is documented, the music is fully covered, and the business knows exactly what it is paying for — because it is buying the license from the rights holder, not from an intermediary.
Direct licensing is not a workaround. It is a framework explicitly provided for in European legislation, alongside the traditional collective management option. The two systems coexist.
So which option should a business choose?
There is no single right answer. Both systems are legitimate, both work, and both have trade-offs. The traditional collective management model gives access to a vast repertoire of commercial music — the songs everyone knows, from the classics to current hits. The direct licensing model typically gives access to original, professionally produced catalogs built specifically for commercial use, often with editorial curation designed for venues.
The choice depends on what the business is actually looking for. A venue that wants to play recognizable chart music for marketing or theming reasons needs the traditional model. A venue that simply wants good background music that fits the atmosphere of the place, day after day, without thinking about it often finds direct licensing a better fit — not because it is cheaper, although it frequently is, but because it comes bundled with the one thing the traditional model does not include: curation.
The curation problem
A collective licensing fee covers the right to publicly broadcast music. It does not cover the work of choosing which music to play. That work is left entirely to the business owner or the staff. Over time, most venues end up with one of three solutions: a staff member's personal Spotify, a random playlist downloaded years ago, or a looping shortlist that customers and employees start to know by heart.
None of these deliver the feeling of walking into a place that has a clear, coherent sound identity. That is what a curated radio service provides. It is a separate value proposition from licensing, and it is the gap that services like My Corporate Radio set out to fill — with direct licensing simply being the legal framework that makes it possible.
What to remember
Music licensing for businesses in Europe is not a trick or a trap. It is a system with two legitimate options: traditional collective management and direct licensing. Both are legal. Both serve different needs. The right choice for a given venue depends on what it wants to play, and more importantly, on how much it wants to think about music at all.
If the answer is "as little as possible, but with professional quality," direct licensing paired with a curated radio service is almost always the most practical option.