DO COFFEE SHOPS AND RESTAURANTS HAVE TO PAY ROYALTIES WHEN PLAYING MUSIC?

In today's service industry, especially in coffee shops, restaurants, hotels, spas, shopping malls, and entertainment venues, music not only enhances the customer experience but has also become a crucial factor in attracting customers, building brand image, and increasing the commercial value of services. Therefore, playing music during business operations has become a regular and almost indispensable activity for many business models.

However, behind this seemingly familiar activity lies a legal issue that many business owners still wonder about or do not fully understand: Does playing music for business purposes require paying royalties? And how are these royalties calculated?

1. Is playing music in a shop considered an act of using a work?

Under the provisions of the Intellectual Property Law, authors and copyright owners hold exclusive rights to their musical works, including the right to perform the work in public and the right to communicate the work to the public.

For service businesses such as coffee shops or restaurants, playing music through speakers, sound systems, televisions, or other broadcasting devices to serve customers is no longer a personal use, but has become a part of commercial activities aimed at increasing service value.

Therefore, playing music in a business space is, in principle, considered an act of using a musical work in public for commercial purposes, directly governed by copyright law.

2. Do shop owners have to ask for permission and pay royalties?

Under the Intellectual Property Law, organizations and individuals exploiting or using works within the scope of the copyright owner's property rights are obligated to ask for permission and pay royalties and other material benefits to the owner, except in exceptional cases where permission is not required by law.

Pursuant to Clause 4, Article 35 of Decree 17/2023/ND-CP, organizations and individuals using published audio and video recordings for commercial purposes in business and commercial activities do not have to ask for permission, but must pay royalties to the copyright owner, performer, and related rights owner for the audio and video recordings as agreed upon from the time of use.

However, many business owners today still have the incorrect perception that subscribing to personal paid services like Spotify Premium, YouTube Premium, or Apple Music equates to having the right to play music in their business spaces. Legally, the terms of use of the aforementioned online music platforms only limit the licensing scope to personal, non-commercial use and do not automatically include the right to play music in public places or in business operations. In other words, platform subscription fees and copyright royalties are two completely independent legal relationships. Thus, even when using music from legitimate online platforms, businesses still have the obligation to carry out permission procedures and pay copyright royalties in accordance with current legal regulations.

3. How are music copyright fees calculated for coffee shops and restaurants?

Pursuant to Appendix II of Decree No. 17/2023/ND-CP, the formula for calculating annual royalties for business establishments using music is:

Royalties/year = Base salary x Adjustment coefficient

However, because from July 1, 2026, the base salary under Decree 161/2026/ND-CP is 2,530,000 VND/month, it means that the royalty rate also automatically increases when the base salary increases.

The maximum royalty collection for coffee shop and restaurant businesses does not exceed 8 times the base salary, equivalent to 20,240,000 VND/year.

In addition, depending on the locality and different types of urban areas, different royalty rates will be applied, specifically as follows:

Business owners can contact the copyright owners directly or related organizations such as the Vietnam Center for Protection of Music Copyright (VCPMC); Recording Industry Association of Vietnam (RIAV),… to pay royalties.

3.1. For businesses that are coffee shops - refreshment bars

The adjustment coefficient for coffee shops and refreshment establishments is calculated based on the usable area. For areas up to 15 m², the base coefficient is 0.35. For every additional m² from 15 m² to 50 m², the coefficient increases by 0.04 per m². Above 50 m², every additional m² is calculated at only 0.02.

Example:

A coffee shop with an area of 15m2, the Royalties/year = 2,530,000 VND x 0.35 = 885,500 VND/year

A coffee shop with an area of 30m2, the Royalties/year = 2,530,000 VND x (0.35 + 15 x 0.04) = 2,403,500 VND/year.

3.2. For businesses that are restaurants, seminar rooms, conference rooms

The adjustment coefficient for restaurants, seminar rooms, and conference rooms is calculated based on the usable area. For areas up to 50 m², the base coefficient is 2.0. For every additional m2 from over 50 m2 to 100 m2, the coefficient increases by 0.05 per m2. Above 100 m2, every additional m² is calculated at only 0.03.

Example:

A restaurant with an area of 50m2, the royalties/year = 2,530,000 VND x 2.0 = 5,060,000 VND/year

A restaurant with an area of 80m2, the royalties/year = 2,530,000 VND x (2.0 + 30 x 0.05) = 8,855,000 VND/year

In addition, for other types of businesses such as fitness clubs, health-beauty care; showrooms; karaoke room and karaoke box services; bars, bistros, clubs, discotheques; hotels, tourist accommodation establishments; amusement and entertainment parks; shopping malls, office buildings; supermarkets, or aviation and public transportation activities, there will be different royalty rates.

4. Sanctions for cases of using music without paying royalties

According to Article 35 of Decree No. 17/2023/ND-CP, if after 90 days from the start of using music without paying royalties, the business establishment must stop playing music.

Moreover, based on Clause 2, Article 38 of Decree 341/2025/ND-CP, if usage continues, the violation penalty can range from 10 - 15 million VND for individuals and 20 - 30 million VND for organizations.

In addition to the violation fines, business establishments must still fully pay the royalties for the time they have used the music.

In the context of increasingly strengthened copyright protection, the use of music in business operations is no longer an issue solely related to customer experience but is also a legal obligation for businesses. Therefore, coffee shop and restaurant owners need to proactively review their forms of music usage, correctly identify the rights holders or legal representative organizations to carry out the permission and royalty payment process according to regulations. Proactive compliance will help businesses limit the risk of disputes and penalties, and ensure stable and sustainable business operations.

DL PINNACLE LAW FIRM LLC