Socialite Bar in Muswell Hill, North London, was ordered to pay music licensing company PPL £19,000 - £4,000 in damages and £15,000 in court costs.
Licensee Bryan John was told by the High Court that he faces a prison sentence of 28 days if the venue continues to play music without a licence.
The court heard the defendant and owner persistently failed to comply with the legal requirement after being repeatedly contacted and given opportunity to rectify the situation.
Christine Geissmar, operations director, PPL said: “There is an intrinsic value that music adds to businesses, and this judgement acknowledges that the creators of the music should be fairly rewarded for this.
"This ruling demonstrates how seriously the courts treat copyright infringement and reiterates that music can only be played in public if the right licences are obtained.”
The order and warning follows a breach of an earlier injunction granted to PPL in January 2014 to prevent Socialite Bar from using recorded music.
Geissmar added: “Those businesses that choose to play recorded music without a licence will face legal action and possibly hefty financial and other consequences as a result.”
PPL issues licences to hundreds of thousands of businesses and organisations across the UK when they play recorded music to their staff or customers.
Licensees include bars, nightclubs, shops, hotels, offices, factories, gyms, schools, universities and public sector organisations up and down the country.