There were also stories of the RIAA trying to extort money from retail stores that played local radio stations over their PA systems. I don't know if these stories were true or not, they might have been urban legends.
Not urban legend, and not RIAA.
ASCAP and BMI are the people you refer to here, and it is a little bit more complex than you state it.
It is perfectly legal for a store owner to play a radio in his store for the entertainment of his customers. It is not legal for him to play his radio into his intercom system and distribute the signal throughout the store. It is legal for him to place a radio next to each of his intercom speakers and play all of the radios at once, thus achieving exactly the same effect as if he had played one radio through his intercom system.
Please do not ask me to explain the logic behind this incomprehensible law -- I don't believe there is any. And please believe me when I tell you that the ASCAP and BMI music police are out there in force, intimidating retailers into compliance and starting legal actions against those who refuse.
tanstaafl.
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"There Ain't No Such Thing As A Free Lunch"