B2B streaming service Soundtrack signs SESAC deal as its highlights $1.4bn a year in lost royalties

Recent research commissioned by the business-focused streaming platform Soundtrack shines a spotlight on a significant revenue shortfall in the US music industry, estimated at $1.4 billion annually. This deficit stems largely from the extensive use of consumer streaming services by businesses without the appropriate commercial licenses.

The independent study surveyed 1,525 decision-makers across nearly 15,000 US business locations, uncovering that while nearly all establishments play music publicly, a striking 79% do so via personal streaming accounts that are not authorized for commercial use. This equates to approximately three million venues nationwide operating outside proper licensing frameworks.

Despite the ubiquity of background music in retail and hospitality sectors, only a small fraction, 19%, of these businesses fully comply with the necessary commercial music licensing requirements. The licensing landscape is further complicated by the fact that just 5% of these entities hold complete licenses from all four major US performing rights organizations (PROs): ASCAP, BMI, GMR, and SESAC.

A considerable portion of business operators—78%—believe they are meeting legal obligations when streaming music, and over half mistakenly assume that personal streaming accounts are permissible for business use. This misapprehension underscores the intricate and often confusing nature of public performance rights and music licensing within commercial environments.

To address this widespread compliance gap, Soundtrack has recently secured a licensing agreement with SESAC, the smallest of the major PROs but one representing some of the most prominent songwriters and publishers, including Bob Dylan, Neil Diamond, Adele, and Ariana Grande. This agreement augments Soundtrack's existing licenses with ASCAP, BMI, and GMR, enabling it to offer a comprehensive, legally compliant background music solution tailored specifically for businesses.

The essence of the problem lies in the mismatch between consumer streaming services’ licensing terms, which are strictly for personal use, and the commercial needs of venues playing music to customers. Businesses need to acquire public performance licenses, either directly from PROs or through services bundling both a licensed music catalogue and the necessary performance rights. Utilizing consumer-oriented platforms without proper licensing not only shortchanges rights-holders but also exposes businesses to legal risks, including potential statutory damages.

Soundtrack’s CEO and founder emphasizes that the complexity of the current licensing system contributes heavily to the ongoing non-compliance, noting that confusion rather than intentional infringement is the primary driver behind many businesses’ practices. By simplifying access to fully licensed music and rights via a single platform, Soundtrack aims to foster a more sustainable ecosystem benefiting creators and rights-holders while remaining accessible to commercial clients.

The partnership with SESAC represents a strategic milestone for Soundtrack’s mission to streamline background music licensing. Given SESAC’s diverse and high-profile repertoire, incorporating its catalogue into Soundtrack’s offering enhances the service’s appeal and compliance robustness for US businesses.

Ultimately, the developments underscore a broader challenge within the music industry to align licensing mechanisms with the realities of digital media consumption and commercial use. As businesses increasingly rely on music to enhance customer experiences, ensuring proper compensation for creators remains a critical concern.

While the full details of how this new partnership will reshape the licensing landscape remain evolving, Soundtrack’s move signals a concerted effort to curb the estimated $1.4 billion annual revenue leakage and promote responsible music usage in commercial spaces.

This research and subsequent licensing progress offer valuable insights into the intersection of music rights management and business operations, reinforcing the need for clearer guidance and practical solutions to bridge knowledge gaps and legal compliance in the US market.