So, if you are listening to an Indiana station in New Jersey, no additional fee should be paid if they are looking at it in terms of the studio
It's not the "studio" where the programming originates, but the place where the music is "consumed" that matters.
Legally, the music composers have a copy "right" to be paid for the use of their creation. The radio station uses the music to attract a crowd of listeners so it can charge advertisers to pitch them, and pays a licensing fee for that use.
Again technically, stores are using the music as an "enhancement" to the atmosphere of their business in an attempt to increase sales and profits, and when they are playing music from an i-Pod, or CD collection, internet stream or over-the-air radio they haven't paid the proper fee for their use of the "creation."
Organizations like Muzak or General Background Music have for years provided music specifically for "in-store" use and all of the necessary fees were paid and accounting was done by that system. By the way, I haven't checked or listened in years but I suspect they are still using sub-carriers on some FM stations to feed signals, although satellites are now just as easy to use most of the time.
From a legalistic point of view, the sandwich shop in Smithtown could be sued for playing music from the i-Pod or even a CD the guy owned, as could Wal-mart and Target, which is probably why they don't use music, the costs could be huge based on square feet, revenue or any other measure.
By the way, some song composers do very well with this system, with checks coming in the mail for the rest of their lives for the little ditty that "came to them" in 15-minutes and they were smart enough to write it down. Sometimes it was a "gift" from the unaware, always remember the Manhattan appliance salesman who was mouthing off about how "we've got to move these color TVs" without knowing he was in earshot of a member of Dire Straits. Yup, you've heard the song "Money for Nothing" and those checks just keep on coming thanks to the big mouth salesman who didn't have a clue.