When you step into a café, restaurant, or salon, a ambient background music (BGM) track is often playing. Music is an essential element for setting the right mood for a business.
However, did you know that when it comes to playing BGM in commercial premises, there is a legal borderline that might seem entirely counterintuitive to the layperson?
- “If I stream my personal Spotify or Apple Music account in my shop, JASRAC will issue a compliance notice (licensing is required).“
- “But if I just broadcast terrestrial radio or radiko over the shop’s speakers, no procedures with JASRAC are necessary.“
The exact same hit songs are coming out of the exact same speakers. So why does one require payment while the other is completely free and exempt from licensing?
The answer lies in a delicate balance within the “Limitations on Copyright” provisions of Japanese Copyright Law and a highly rational hidden framework. In this article, we will thoroughly unpack the mystery behind commercial music copyright.
1. At a Glance: “Safe” vs. “Infringing” Audio Sources for Store BGM
First, let’s look at the latest compliance standards regarding what is legally permitted (and compliant with terms of service) and what requires formal licensing through copyright management organisations like JASRAC when playing music in a commercial space.
| Audio Source Type | JASRAC (or Equivalent) License Required? | Key Caveats & Notes |
| Commercial CDs / Purchased Audio | Yes | Annual or monthly fees apply based on floor space (e.g., 6,000 yen/year for establishments under 500 m²). |
| Personal Streaming Services (Spotify, Apple Music, etc.) | Prohibited (Terms Violation) | Before even considering JASRAC payments, the terms of service (ToS) of virtually all personal streaming platforms strictly prohibit commercial use (playback in public/commercial spaces). |
| Terrestrial Radio / TV (AM / FM / Digital Terrestrial) | No | Under the copyright law’s “Limitations on Copyright,” broadcasting this audio as-is requires absolutely no formal procedures. |
| radiko (Simultaneous Internet Streaming) | No | Limited to simultaneous (real-time) streaming only. Following the 2021 amendment to the Copyright Act, this was officially recognized as exempt from licensing requirements. |
| Commercial BGM Services (USEN, OTORAKU, etc.) | No | The monthly subscription fee already includes copyright royalties paid to JASRAC and other entities, so no individual licensing is required. |
As shown above, playing a CD you bought or using a personal streaming subscription in your store is a compliance violation (or requires licensing). Conversely, playing the “radio” (including radiko) as-is is completely free and exempt from administrative procedures.
2. The Key to the Mystery: The “Home Receiver” Magic of Article 38, Paragraph 3
Why is playing the radio or television in a commercial store completely exempt? The legal basis is found in the “Limitations on Copyright” (exceptions where copyrighted works can be used without the copyright holder’s permission) under Article 38, Paragraph 3 of the Copyright Act of Japan.
Let’s look at a summary of the statutory text:
Copyright Act, Article 38, Paragraph 3
A work that has been broadcast, wire-broadcast, or simultaneously streamed over the internet, etc., may be publicly communicated via a receiving device, provided that such communication is not for profit-making purposes and no admission fee is charged to the audience. The same applies to cases where the public communication is made using an ordinary receiving device meant for home use.
The crucial element here is the second sentence: “The same applies to cases where the public communication is made using an ordinary receiving device meant for home use.”
While the first half of the provision implies that audio can only be played for free if it is non-profit, the second half creates a major exception. It establishes that even for-profit commercial establishments do not commit copyright infringement if they use a standard radio or TV (a home receiver) that anyone can buy at an electronics retail store to play the broadcast directly to patrons.
Furthermore, to adapt to recent digitalisation, the 2021 amendment to the Copyright Act added the phrase “simultaneously streamed over the internet, etc.” to this provision. This legally clarified that radiko (real-time streaming), which simultaneously broadcasts radio programming over the internet, receives the exact same exemption as terrestrial radio.
3. Why Does This Rule Exist? 3 Hidden Reasons
You might think, “It’s the exact same music. Is it not unfair to give radio preferential treatment?” However, there are three highly rational economic and practical reasons behind this framework.
Reason 1: Prevention of “Double Dipping” (Double Payment)
For music played on radio or television, the broadcasting stations (NHK and commercial broadcasters) have already entered into comprehensive annual licensing agreements with copyright management organisations like JASRAC, paying massive copyright royalties. Because a fair price is already paid at the “point of transmission into society,” forcing receiving retail stores to pay a second time would result in an excessive over-protection of rights.
Reason 2: Protecting the “Public Infrastructure” and “Information Dissemination” of Media
Television and radio serve as vital public infrastructure for delivering disaster info, social news, and culture to the public. If playing the radio in a restaurant were deemed illegal, radio sounds would disappear from local diners and barber shops, hindering information flow and cultural development. Since the ultimate objective of the Copyright Act is to “contribute to the development of culture,” it explicitly protects the inherent characteristics of these media.
Reason 3: Pragmatic Limits of Enforcement
It is logistically impossible for JASRAC to patrol every single small shop, office, and factory across Japan to monitor whether they are playing a radio or television in the background. Rather than enforcing a practically unmanageable regulation that would trigger societal confusion, it is far more reasonable to grant a uniform exemption under the law.
4. Why Are Spotify and Commercial CDs Subject to Royalties?
If radio is safe, why is playing a purchased CD or a personal Spotify playlist in a store prohibited or subject to licensing fees?
The fundamental differentiator under copyright law comes down to two concepts: the store’s “control over the tracks” and the “creation of a new market.”
- In the case of radio: The store has zero control over what song plays next. They are merely passively passing along audio that happens to be transmitted.
- In the case of Spotify or CDs: The store deliberately selects and controls the music based on its own intent—such as choosing a specific jazz playlist to match a café’s vibe or a pop playlist tailored for a salon.
When an establishment actively selects music to curate its commercial space, it is no longer merely utilising public receiving infrastructure. Instead, it is actively leveraging the value of music to drive its business profits (thereby creating a new BGM market). Therefore, separate from what the broadcasters pay, the establishment itself incurs an obligation to compensate rightsholders for the “right of public performance/communication” (requiring formal procedures with JASRAC).
⚠️ Note: Regardless of whether you pay JASRAC or not, personal streaming services like Spotify and Apple Music explicitly prohibit “commercial use” (such as store BGM) in their end-user license agreements (EULA). Violating these terms carries a risk of account suspension before any legal statutory compliance issues even arise.
5. [Crucial Compliance Update] Two Traps That Make radiko Illegitimate
For business owners thinking, “Great, I’ll just use radiko for my store BGM from now on,” please be highly aware of the following two traps.
① “Time-Free” (On-Demand Catch-Up) Features Are Not Exempt!
The exemption under Article 38, Paragraph 3 applies exclusively to “real-time simultaneous streaming.” Using radiko’s convenient “Time-Free” feature (an on-demand function allowing playback of programmes from the past week) to stream music inside a store falls outside the scope of the copyright limitation. Doing so requires a formal license from JASRAC.
② Exceeding the Scope of an “Ordinary Home Receiver” Is Infringing!
The law strictly exempts playback at a “household” tier.
Connecting a smartphone or PC to one or two standard, compact consumer speakers is legally safe. However, if you route the audio through a commercial centralised sound system (amplifiers, mixers, and multiple built-in speakers) embedded in the walls or ceilings of a building or large facility, it is legally deemed to exceed the scope of a home receiver. In this case, even for radio, you must file an application with JASRAC and pay the appropriate licensing fees.
Conclusion: Copyright Law Is a Balance Between Monopoly and Utility
The rule where “Spotify is prohibited but radio (radiko simultaneous streaming) is permitted” may look arbitrary at first glance.
However, beneath the surface, it beautifully reflects the core tenet of copyright law: the balance between protection and utilisation. It guarantees that rightsholders are fairly compensated when their works are actively leveraged for commercial curation (individual control via Spotify, etc.), while ensuring that the broader dissemination of public information and social utility is not stifled (passive reception via radio).
If you want to design a unique brand space with specific music tailored to your store’s identity, the smart, modern approach to business management is to either file a proper application with JASRAC or leverage commercial BGM apps (such as USEN or OTORAKU) that handle rights clearance directly out of the box.
📚 References
This article was compiled based on official public information provided by the following government agencies and copyright management organisations:
- Agency for Cultural Affairs: Regarding the 2021 Amendment to the Copyright Act (Facilitating Rights Clearance for Simultaneous Internet Streaming of Broadcast Programmes, etc.)
https://www.bunka.go.jp/seisaku/chosakuken/hokaisei/r03_hokaisei/ - JASRAC (Japanese Society for Rights of Authors, Composers and Publishers): BGM in Various Facilities (Exemptions from Procedures)
https://www.jasrac.or.jp/users/facilities/bgm.html
This text has been translated by a large language model (LLM).