MUC109.LEC 9 Music Licensing


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Music Licensing Basics

MUC109.LEC 9 Music Licensing

  1. 1. Music Business Essentials MUSIC LICENSING
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 20. Key Take Aways 5 Main Licenses that bring revenue to songwriters/publishers: •Mechanical •Synchronization •Print •Performing •Foreign Sub-Publisher
  21. 21. For Educational Use Only This slide presentation is part of the Music Business Essentials series. Contact for more information