What is Music Licensing?
Music licensing is the procedure of obtaining permission from a copyright owner to use their music for specific purposes. This is essential for musicians, producers, and businesses alike. Without proper licensing, using copyrighted music in any form, including videos, movies, websites, or commercials, is illegal and can result in legal consequences. For musicians and producers, licensing a new work is a way to not only protect themselves but also others from illicit use of their music. Music licensing essentially protects against unauthorized usage.
Licenses vary according to the type of use of the music. A synchronization (synch) license grants the licensee permission to use a piece of music in synchronism (to sync) with a visual image on screen. This is often what is used when music appears in TV or movies. A master use license deals with audio or sound recordings in motion pictures. Rights to use a composition and a sound recording are two different things. To illustrate, a well-known rock track can make the perfect fit for a scene in a movie, but both the composer and the recording company must grant permission to use that particular song within that specific context. General public performances of the song are covered by a blanket license that is obtained from a performance rights organization.
Only noncommercial uses of music do not require licenses. Usually this involves a composer licensing his own work for a private birthday party or another such noncommercial event. Even for college bands, it is wise to use licenses when performing original music . Obtaining a license would simply avoid any infringement claims by a third party who might assert that the performer had infringed their copyright. Of course it is only reasonable that licenses are needed when music is recorded for commercial release or used in business transactions directly or indirectly. By obtaining the license, the owner of the copyrighted work gets paid for their rights and the users get to avoid possible infringement claims. It should be noted though that if a proper license was obtained and the user still gets hit with a claim, the user will be protected. In other words, obtaining a license protects against infringement claims by a third party.
There is a variety of companies and databases where you can obtain a license for music. These services are referred to as licensing marketplace solutions. These licensing companies have large catalogues of music and offer protections against claims. These types of companies do not cost much money as they make profit from licensing agreements and are usually on a commission basis. They may not cover all your needs though as specific licensing arrangements can remain possible.
The following are the three main types of licenses: License for Internet Streaming: This is granted for the right to perform music over the internet, such as webcasts from a website or a webpage within the site. License for Radio Airplay: This is for the right to play recorded music over the radio. License for Commercial Purposes: This is for the right to use music in a video, a movie, or a commercial.
Essential Elements of a Music Licensing Contract
Of utmost importance in a music licensing agreement is the specificity of the rights being granted. What is being licensed? Just the composition? Just the recording? The composition and recording? The universe? Not at all? Additionally, what is the particular use to which the song will be put? And it’s significant to note that the uses of songs are often almost infinite. Typically, this is more a question of partitioning the world (or partitioning it into different types of uses) than imposing any temporal or geographical limitations. Would we, for instance, want to leave the door open for the licensee to use the song in a film when it has been agreed all along that it was going to be used (and paid for) as a TV licensure? This can be extremely important with respect to residual and participatory performers (background artists, session players and the like) whose payments might well be different with respect to a recording used in film as opposed to TV. Licensing the composition alone might also involve passing on all mechanical rights, while licensing an audio recording might not. These and other factors must be considered and described with great specificity in the underlying licensing agreement. Omitting those elements that have been accurately, if ambiguously, expressed can be fatal to a licensing transaction.
Another key element is duration, or how long the agreement lasts. As noted earlier, many licensing agreements today are based on pre-existing arrangements of all kinds. In these instances, if the recording or other elements (such as the music video) were made prior to the effective date of the licensing agreement, the terms normally mirror the terms under which the underlying work was made. This is because the licensing agreement cannot alter the original arrangements in any way. For example, is it intended that the song, after previously being assigned all worldwide rights including television, film and digital media, now advanced into a new territory? With respect to time, is it intended that the agreement remains in force after the initial period during which the licensee is actually involved in the release of the song? The question of duration only arises with respect to an IP license when specifically discussed. There is no a priori assumption of anything with respect to duration. It is one of the elements of IP transaction law that must be very, very carefully negotiated and described.
Another critical area involves the question of territory. Here again, an IP license does not have a presumption of universality. In fact, the universe is too big and too complex to be quickly and easily described in a licensing agreement. As IP lawyers and dealmakers we have to describe the limitations of territory, in much the same way as we’ve described the necessarily limited nature of IP and IP commercialization.
Finally, payment terms as well as payee identification should be carefully specified in a licensing agreement. The need for specificity with each of these elements can not be overemphasized. These are elements of almost any licensing agreement. But they are particularly important in music licensing agreements, where the universe of potential uses now includes, at least theoretically, everything imaginable. To say that a song might be used by a licensee in connection with its releases is only to suggest that you may have licensed the song to the release of the sun. Specifying the particular uses that are intended to be licensed is essential to the creation of a licensing agreement that is both enforceable and useful. If, for whatever reason, the parties add global universe to their write of grant, then the compensation terms for such a grant need to be paid for seriously and very, very highly.
Five Types of Music Licensing Contracts
Master Use Licenses: These agreements allow the licensee to use a pre-recorded song in an audiovisual work. This type of licensing may be required for movies, documentaries, commercials, and video games. The licensing fees for a master use license can vary based on the popularity of the song.
Synchronization Licenses: A synchronization license is a specific type of master use license that gives the licensee the right to include a piece of music in an audio-visual work, such as film, television, or advertising. Synchronization licenses are negotiated between the person or organization that owns the rights to the song and the person or organization that will be using the song. The license allows the song to be synchronized with your video content, meaning more than just background music-the song will actually line up with the visual content on the screen. The license agreement will dictate the terms of use, such as how long the music will be used and the number of copies that will be made using the song.
Mechanical Licenses: This license allows manufacturers of audio-only music recordings to create a limited number of copies of a song. A mechanical license is also used to authorize the use of music on digital formats. Mechanical licenses are typically negotiated through Harry Fox.
Allelicenser.org is a global organization interested in developing a music licensing system on the internet.
Performance Licenses: A performance license typically allows a licensee to perform a composition multiple times, and may also grant public performance rights. A public performance can include instrumentation, singing, dancing, or the recitation of a protected work. Public places that often need performance licenses include schools, churches, theaters and hotels, and sporting events where copyrighted music may be performed.
How to Create a Music Licensing Agreement Template
To obtain the most flexible results, audio producers and owners of recorded music should create a template music licensing agreement. As much as possible, the template should be drafted according to the law of the region in which the music is being used. This is because local law (which must be followed) often has an important legal significance and tax consequences for domestic domiciled producers and music owners, and can affect their worldwide rights to use the "work." After recording a new music composition, the agreements for controlled compositions should be drafted. If the composers are all non-American citizens, the terms will be slightly different, especially as to income taxes. The wording of an American music licensing agreement for the exploitation of a "work" ("composition") should use broad language, providing for reasonable and customary royalties to be paid for radio play, streaming, Internet radio, sales (including digital downloads), album, compilation, synchronization, public performance fees, download cards, showing the film or video on television, and sale of the music by subscription (such as iTunes, etc., going without limitation to the "work" and all of its uses by the licensee or any affiliate of the licensee or anyone else. If the licensed compositions bear a copyright notice (which they should), under the United States Copyright Act, the copyright is valid under United States law, regardless of whether the song (composition) is registered with the U.S. Copyright Office. However, there is a significant practical advantage to copyright registration: the right to sue for infringement. Registration is therefore highly recommended, as is the use of registered "small c" copyright notices in any distribution.
Legal Issues & Common Mistakes
Understanding the legal considerations that go into a music licensing agreement needs to be a priority for any person or business looking to purchase music for commercial use. Not only does this protect all parties involved, but it will also act to minimize future legal disputes.
A music license agreement can be fairly complex, but three of the main legal considerations pertinent to these agreements are:
- A statement that the license agreement is made under the jurisdiction of a particular state.
- A statement that the agreement is binding to all parties and their heirs.
- An explanation of how the final agreement can be modified.
Most music license agreements are made under jurisdiction of the state of the licensor, as opposed to the licensee , simply because most music professionals live and work in the states in which their business resides. However, you should ensure that any modifications to the music licensing agreement are to be made under the jurisdiction of your state.
Another important legal consideration to keep in mind when drawing up a music licensing agreement is that no terms of the agreement can be binding to the heirs of the original individuals involved in the agreement unless explicitly stated. If the agreement is not explicit about the conditions of modifications, then no modifications can be made to the music licensing agreement unless all parties agree to them in writing.
If you’re not sure of how signing an agreement would affect the legal rights of your heirs, then consult with a music licensing attorney before signing.
Benefits of Using a Music Licensing Lawyer
Hiring a music licensing lawyer to review a music licensing agreement is a vital step in the licensing process. While an attorney can provide clarity on any potentially onerous terms, many filmmakers and musicians choose to use a music licensing lawyer to navigate complex negotiations and ensure legal compliance with the license term and purpose. A music attorney reviews music licensing deals to provide the artist with a clear understanding of all terms. They can shed light on any potential ambiguities that might result in increased costs or restrictions at a later date, as well as flag problematic wording that could lead to licensing vs. copyright infringement confusion. A music attorney can also offer insight into which terms to request or negotiate and which terms are standard.
Conclusion & Helpful Resources
In summary, music licensing agreements are critical elements of the production and distribution process. Understanding your obligations and responsibilities regarding the use of music and other audio/visual content in interactions with clients, partners, and employees is critical for both front and back office personnel, from sales to HR. By being familiar with the rules around music licensing, a business can save themselves a lot of time, effort, and money .
If you have any questions on this topic or if you are dealing with music licensing issues I advise requesting a one-over-one with a specialized copyright attorney that has experience with music licensing agreements.
The following resources will be valuable to you in your continued exploration of this topic.
Music License Agreement for Television
Record Label Catalog License
Artistic License Agreement
Music Publicity Agreement
Sound Recording Licenses
ASCAP Member Event Manager
ASCAP Jingle Writer
BMI Info for Event Planners
SESAC Info on Music Festivals