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MUC109.LEC 9 Music Licensing

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Music Licensing Basics

Music Licensing Basics

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  • 1. Music Business Essentials MUSIC LICENSING
  • 2. Music Licensing Basics • Permission is, generally, required to use another’s copyright • Music Licensing= permission to use a song or sound recording • Music Licenses can be issued by: • Songwriters themselves • Record Labels, Producers • Music Publishers • Performing Rights Organizations • Agents/Agencies sub-contracted to manage licenses on behalf of copyright holders
  • 3. Music Licensing Basics • Licenses can be paid by: --Up-front fees and/or --Royalties • Royalties $$ in return for licenses, the copyright owner receives monetary compensation • Usually expressed as a percentage (%) of total sales
  • 4. Music Licensing Basics • Royalties for Music are earned income from various sources --sale of CDs, Ringtones --public performances; Radio --placements of music in Film, TV, Video Games, Advertising • Non- Music royalties can also be earned --sale of Merchandise --appearances in Film and TV
  • 5. Music Licensing Flow Songwriter Song Music Publisher License to use song Recorded Film/TV/Video Foreign & Music Games Print Synchronization Sub-Publisher Mechanical License License License
  • 6. Music Licensing Flow Songwriter Song Performing Rights Organizations License to use song In- Business Digital Live Events Festivals Bars/Clubs Transmissions Compulsory License Blanket License
  • 7. License Types – Mechanical License= gives a record company or other party the right to reproduce a song in a recorded format, like a CD. • Negotiated • Compulsory Mechanical License – Performing Rights Licenses= gives live performers and those presenting sound recordings in public the right to publicly perform a song.
  • 8. License Types – Synchronization License= authorizes the use a song (in synch) with visual images-->i.e. in TV, Film, Video – Print Licenses= A print license authorizes the sale of a song in printed form--> i.e. Sheet Music – Foreign Licenses= authorizes agents located in foreign countries (aka sub-publishers) to collect royalties generated in their country, • These agents retain about 15-25% as their fee
  • 9. Licensing Sources Mechanical Licensing sources: •Recorded music on CD, Vinyl •Ringtones •MP3s Synch Licensing sources: •TV shows •Commercials/jingles •Sonic logos •Films •Corporate Videos •Video Games Performing Rights Licensing sources: • PROs- Public Performances • SoundExchange- Digital Audio
  • 10. Licensing Revenue Synch Licenses • Between US$1.00 and US$250,000 per song. Average fee is usually between US$4,000-$6,000 per composition (i.e. Master & Synch) • A successful TV-series theme song can generate numbers in excess of $1.5 million over a 10-year period • The background score of a top box-office film can generate well over $2 million in performance income during its copyright life
  • 11. Licensing Revenue Mechanical Licenses • A #1 song of the year can generate at least $2-million for writer/publishers • A popular song can generate over $250,000 for Mid-level artists
  • 12. Licensing Fees Factors that determine Mechanical Licensing Fees: • Compulsory fees set by government in US- Compulsory Mechanical Rate is 9.1 cents, per unit • Fees are updated periodically • Record Labels often negotiation lower mechanical fees, directly with publishers/artists
  • 13. Factors that determine Synch Licensing Fees: • Territory (USA? World? Provincial?) • Media (Theatrical only? Radio? Television? DVD/Video? New technology?) • Usage (Featured Instrumental/On Camera? Background Instrumental? Background/Vocal?) • Length (Entire composition? part thereof?) • Version (re-record or original recording) • Term (Perpetuity, 10 years)
  • 14. Licensing Agencies Performing Rights Organization (PRO)= --A voluntary membership association for songwriters and publishers --Offers the following services for members: • issues performing rights licenses • tracks public performances • collects performing license revenues • distributes revenues to song writers and music publishers.
  • 15. Licensing Agencies PROs in the U.S.: • ASCAP--The American Society of Composers, Authors and Publishers • BMI--Broadcast Music, Inc • SESAC, Inc.---Society of European Stage Authors and Composers • SoundExchange –Digital Audio Transmissions only
  • 16. PRO Differences ASCAP • Non-Profit; started by songwriters • Membership open to all published songwriters and their publishing companies • $863 Million in Annual Revenue (2007) BMI • Non-profit • $839 Million in Annual Revenue (2007) SESAC • For-profit • Can only join by invitation/referral of current member
  • 17. PRO Membership Details • Songwriters can only join ONE PRO at a time • Contracts are generally short (2 years) • Publishers join the PRO of the songwriter they represent • Publishers may join multiple PROs, but must create separate companies per PRO • Business affiliates don’t officially join, but are “licensees” and connect with ALL PROs to ensure they are covered for public performances of live music
  • 18. Licensing Agencies Mechanical rights agency: Harry Fox Agency --Manages mechanical rights for most publishers HFA ensure that users (usually record labels) pay their royalties, and provide regular account statements HFA charges a set percentage of gross royalty collections for their service (7.75%) HFA collects $1.5 Billion in royalties annually
  • 19. Key Take Aways • Music Licensing and Publishing are not the same thing— • Publishing is a business sector which offers a range of administrative and marketing services to songwriters • Licensing is the business process whereby revenue is made and managed from the permission to use a song in various outlets--> TV/Film/Videos/Radio/CDs • Music Publishers can offer licenses
  • 20. Key Take Aways 5 Main Licenses that bring revenue to songwriters/publishers: •Mechanical •Synchronization •Print •Performing •Foreign Sub-Publisher
  • 21. For Educational Use Only This slide presentation is part of the Music Business Essentials series. Contact info@musicbizclasses.com for more information

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