Music for a store: licenses, contracts, and fines

Music in a store, cafe, salon, and other business: how to use it legally

Background music in a trading floor, cafe, salon, showroom, waiting area, summer terrace, or order pick-up point is not household listening, but the use of music in business activities. Ukrainian legislation considers such playing as public use of works, performances, and phonograms, which requires a proper legal basis: rightsholder's permission, license, agreement with an authorized collective management organization, or another legal basis directly provided by law. Law of Ukraine

When does a business need to formalize rights?

Formalization of rights is required if the music is played in a place where clients or other members of the public are or may be present. The law defines public performance as the presentation of works, performances, phonograms, or broadcast programs directly or by means of devices in places where members of the public are or may be present. This covers speakers in a store, a TV in a waiting room, a radio at the reception, a playlist in a salon, music in a coffee shop, and similar scenarios. Law of Ukraine

It does not matter where the sound is taken from: radio, TV, YouTube, Spotify, USB drive, laptop, or an employee's phone. For the law, the medium is not important, but the method of use in business and the presence of the right to such use. Law of Ukraine

How to properly formalize the use of music

The legal path depends on the source of the music and who specifically grants the rights.

Possible legal grounds include:

For the areas of collective management, the law explicitly provides for, in particular, the public performance of non-dramatic musical works and the public communication of non-dramatic musical works, while conditions for users should be based on objective and non-discriminatory criteria, and tariffs should be economically justified in relation to the type of activity, nature, and volume of use. Law of Ukraine

Is one contract enough?

There is no universal "always yes" answer. For recorded music in an establishment, both the rights to the musical work and the related rights to the performance and phonogram must be taken into account. The law allows public performance and public communication of commercially published phonograms without the direct permission of the performer or producer of the phonogram, but with the payment of equitable remuneration; this does not negate the need to settle the rights to the musical work itself. Therefore, the package of documents depends on who exactly grants you the right and what powers they have. Law of Ukraine

In practice, this means: before signing the contract, you need to check that the document covers exactly the method of use that you actually have — background sound in the trading floor, in several rooms, on a summer terrace, at several addresses, via a local network, TV, playlist, or other equipment. The license agreement should define the method of use, term, territory, and other essential conditions. Law of Ukraine

What documents does a business need to have?

For the safe use of music in an establishment, it is advisable to have a set of documents confirming your right to commercial public use:

Separately, it should be checked whether the staff uses personal subscriptions, private accounts, or random tracks from the internet without proper permission for the business. The right must be registered not "to the employee", but for the use of music in your business activities. Law of Ukraine

Radio, TV, YouTube, Spotify, and other services

A radio or TV in a customer hall does not make music usage "free". The same applies to YouTube, music streaming, and personal playlists. If music plays for visitors, the business must separately ensure a legal basis for public use. Law of Ukraine

If a service sells a special business license or explicitly allows commercial public performance in an establishment, the terms must be read very carefully: what exactly is allowed, for what territory, at what addresses, whether music can be used in ads, social media videos, a franchise network, on summer terraces, and at multiple points simultaneously. The license is valid only within the limits explicitly established by the agreement. Law of Ukraine

Can AI-generated music be played in a store?

Yes, but not automatically and not always.

Ukrainian law already separately regulates non-original objects generated by a computer program. Such objects are protected by a special kind of right (sui generis), and the subjects of this right can be the authors of the program, their successors, persons to whom property rights to the program have been transferred, or legitimate users of the program — depending on the law and the contract. The term of such right is 25 years from January 1 of the year following the year of generation. Law of Ukraine

Therefore, for business, the rule is as follows:

For a store or cafe, it is practically not enough just to "generate a track". You need documents or terms of service that explicitly allow commercial public use in a physical establishment. If the service allows only personal use, this is not enough. Law of Ukraine

When you don't have to pay

Using music in an ordinary store, cafe, or salon without formalizing rights is usually not allowed. But there are exceptions that actually exist in the law.

The law allows free use during official ceremonies organized by state or local government authorities, religious ceremonies, and funerals — only to the extent corresponding to the nature of such ceremonies. For a typical commercial establishment, this rule does not apply. Law of Ukraine

Works whose protection term has expired can be used: for copyrights, this is generally 70 years from January 1 of the year following the author's death; for phonograms and videograms — 50 years from January 1 of the year following the production or lawful publication. But there is a significant trap here: a classical musical work may be in the public domain, but a specific modern recording of this work is not. That is, Bach as a composer has long been in the public domain, but a 2019 orchestra recording is not. Law of Ukraine

Separately, the use of music under an open or royalty-free license is possible, as well as music specially created for you. But even in these cases, the conditions must be read: whether commercial public performance is allowed exactly in the establishment, whether there are territorial or time restrictions, whether attribution is required, or whether the track can be used in ads or videos. If the music was created to order, it is better to explicitly and fully record the customer's rights in the contract. Law of Ukraine

Royalties, accounting, taxes, cash registers (RRO/PRRO)

Payments for the legal use of music are not a separate "music tax". The Tax Code defines royalty as a payment for the use of or for granting the right to use an intellectual property rights object, including payments to collective management organizations. Law of Ukraine

For individual entrepreneurs on the general system, the Tax Code explicitly allows accounting for royalties to rightsholders and deductions to rightsholders under contracts with CMOs as part of expenses related to business activities. For tax purposes, having primary documents is important. Law of Ukraine

Royalty payment transactions in cash are generally not subject to VAT under subparagraph 196.1.6 of the Tax Code. Law of Ukraine

The mere fact of payment to a rightsholder or CMO does not create a separate obligation to use RRO/PRRO solely because of the music. The RRO Law links the settlement transaction to the acceptance of funds from a buyer for goods or services. Consequently, the RRO/PRRO issue in your business is resolved according to general trade or service rules, and not because of the mere presence of background musical decoration. Law of Ukraine

What liability is threatened?

For the illegal use of music, a business risks facing issues on several levels at once.

Civil law level: the rightsholder, licensee within the acquired rights, CMO, or other appropriate subject can demand the cessation of the infringement, compensation for damages, recovery of income, seizure of counterfeit copies, and other methods of protection in court. Law of Ukraine

Administrative level: Article 51-2 of the Code of Administrative Offenses provides for a fine from 50 to 300 non-taxable minimum incomes of citizens for the illegal use of an intellectual property rights object, with the confiscation of illegally manufactured products, equipment, and materials intended for their manufacture. Old references to a fine of "10 to 50 non-taxable minimums" for such violations no longer correspond to the current wording. Law of Ukraine

Criminal level: Article 176 of the Criminal Code of Ukraine provides for liability for intentional illegal use or other intentional infringement of copyright and related rights if it causes material damage on a large scale. The sanction depends on qualifying features and the severity of the violation. Law of Ukraine

The law does not establish a separate state permit specifically for background music in a store, so the typical problem here is not the cancellation of a "music license", but court claims of rightsholders, collection of remuneration, administrative or criminal liability for violation of rights. Law of Ukraine

A short algorithm for an entrepreneur

Example from judicial practice

The Supreme Court in 2020 drew attention to the fact that the lack of permission to use related rights does not refute the very fact of public performance of musical works in the premises of a cafe if such a fact is proved by appropriate evidence. The review of the Supreme Court's practice also highlights the requirements for video recording of such violations: CMO representatives and the place of fixation must be identified on the recording, and the date and time must be confirmed by appropriate evidence; fiscal receipts are also used in cases to confirm presence in the establishment at the relevant moment. supreme.court.gov.ua

Official sources

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