Music Licensing Basics

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