Music Streaming for Businesses: The Hidden Costs of In-House Licensing

When you’re running an app, a connected fitness business, or any digital experience requiring consumer engagement, music often plays a vital role in creating loyalty and retention. In fact, in a recent consumer survey of mobile app users across the US, 75% said they would be more likely to download an app if it streamed popular music*. If you’ve ever tried to figure out how to license music for a digital business, you might have found yourself wondering the best way to get started.

At first, taking a DIY approach to music streaming for your business can seem like a cost saver, but as you head down that path you’re sure to find a whole list of legal, operational,  technical considerations associated with licensing music for commercial use. Building your own music infrastructure requires specialized expertise and often comes with hefty price tags and the challenges of managing multiple vendor relationships.

Here is a look at the hidden costs you’ll face when you try to build your own music streaming infrastructure and manage music licensing in-house, versus using a Unified Music System (UMS) like Feed.fm.

Negotiating music licensing for businesses

Let’s start with the basics of music licensing. Many people are unaware that each individual song has multiple sets of rights attached to it. There are performing rights organizations (PROs), publishers, and record labels to work with, and each of those has different rights and different teams to deal with in each geography. That’s a lot of hands to shake for each song that you need permission to use.

Hidden costs of music licensing for businesses:

• Specialized legal counsel: you’ll likely need lawyers who understand intellectual property and music rights specifically. 
• Time spent:  Negotiating music deals isn’t quick—it can take months, especially if you’re dealing with multiple rights holders across various geographies.
  
  

Music reporting and compliance: Ongoing music rights management for businesses

Once deals are secured with every rightsholder required, you will be responsible for ensuring that the licensing agreements are followed and that any compliance requirements are met. This includes regular reporting, royalty payments, and the need to track exactly where and when each song is played. If you make a mistake here, it can result in legal action from the rightsholders. There is no room for error in music streaming for businesses.

Hidden costs of compliance:

• Platforms to manage: You’ll need to invest in tools that accurately track music usage and report to the rightsholders. Typically, these platforms aren't functional off the shelf, so you’ll need to customize.
• Internal management: Someone will need to manage these efforts full time. So add in salary, benefits, and training. It’s safe to assume that you will also need engineering support for integration, music management, and reporting.

Music curation: Finding the right soundtrack for your brand

Music selection is an often overlooked piece of the puzzle as well. Playing the right music for the right person at the right time takes a sophisticated mix of technology, data, and human know how. Understanding the context of the music that will be played, the brand that is playing it, and accounting for the latest trends can be a time consuming operation. It pays to get music right the first time. Don’t overlook the importance of an effective soundtrack on your MVP.

Hidden costs of music curation for brands:

• Staffing: You’ll need experienced music curators who understand your brand and audience.
• Missed opportunities: If your team lacks the expertise or time to find the perfect music, your user experience may suffer, resulting in lower customer retention or satisfaction.

Music streaming for businesses: Building an infrastructure

If you’re streaming music, you need the technology to do it efficiently. Building a robust infrastructure to handle streaming, storage, and distribution is no small task. You’re not only paying for the servers or cloud infrastructure but also the development team to build, maintain, and scale it. Your music player and UX are critical. The ability to skip/change music is important to 92.6% of people*.

Hidden costs of music streaming infrastructure:

• Development and IT: A team of developers, IT pros and system admins will be needed to keep things running smoothly.
• Licensing fees associated with music streaming for businesses: Beyond the upfront deals with rightsholders, you may owe additional fees for streaming, depending on the number of users or volume of streams. 

Unified Music Systems (UMS): The solution you didn’t know you needed, until now

For businesses looking for secure music streaming solutions, using a Unified Music System offloads all of the responsibilities associated with music streaming for businesses. UMS providers like Feed.fm already have the licenses in place with PROs, labels, and publishers. Say goodbye to the legal, operational, and technical burdens—with a UMS you don’t have to build anything from scratch.

Managing music in-house may sound like a way to maintain control and maybe save a buck, but in reality, the hidden costs of licensing, compliance, curation, and building a secure music streaming infrastructure add up quickly. For most businesses, particularly those focused on apps, fitness, or connected devices, it’s a huge investment of time and resources. Using a Unified Music System can save you from legal headaches, technical issues, and financial uncertainty, letting you focus on what you do best—delivering a great experience to your users.

Get a free music consultation:

*Feed.fm Consumer Music Survey, 2024