Use of sound recordings at a non-teaching function is considered a "public performance" under US and International Copyright Laws (Title 17 of the US Code). A "public performance" is defined as music played for third parties by almost any means including CDs, cassettes, records, videos, live musicians, telephone music-on-hold, jukeboxes, and radio or television music played over a commercial system.
A public performance is one that occurs "in a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered." A public performance also occurs when the performance is transmitted by means of any device or process (for example, via broadcast, telephone wire, or other means) to the public. In order to perform a copyrighted work publicly, the user must obtain performance rights from the copyright owner or his representative.
The Fair Use provisions of the Copyright laws allow for playing recorded music in a face-to-face teaching setting only. Question number 4 of ASCAP's (American Society of Composers, Authors, and Performers) FAQ on Licensing says this:
"If the performance is part of face to face teaching activity at a non-profit educational institution, permission is not required. Permission is required when music is used as part of training seminars, conventions, or other commercial presentations."
Any other use of copyrighted music in campus activities is deemed outside of the fair-use provision and must adhere to the laws governing a public performance.
Remember, copyright permission is not required to play music as part of face-to-face teaching activity at a non-profit educational institution. However, permission is required when music is used as part of training seminars, professional conferences, or other commercial presentations.
Use of Pandora in a commercial setting is available only via hardware sold by DMX. Read more about using Pandora in your business. Learn more about hardware sold by MoodMedia (required to use Pandora in a commercial setting).
Obtain an ASCAP license to play music in a commercial setting. Read ASCAP FAQ for more info. ASCAP (American Society of Composers, Authors and Publishers) is a membership association of U.S. composers, songwriters, lyricists and music publishers. ASCAP licenses and distributes royalties for the non-dramatic public performances of their copyrighted works, and makes giving and obtaining permission to perform music simple for both creators and music users. For more info on music and copyright, read "Using Copyrighted Music" by ASCAP.
Services that do not allow music to be used in commercial settings:
Spotify cannot be used in a commercial setting because the Terms & Conditions that you agree to when registering for Spotify state that Spotify is for personal, non-commercial use only.