November 7, 2007

Licensing Open Thread...

by Chris Randall

I'm in a much better mood now, thanks for asking. A member of the AI Frequent Flyers Club dropped me a line yesterday with some questions about licensing, and he and I thought it would be a good subject for an open thread. I've mentioned before, and I'll do so again, that the vast majority of the income I receive directly from making music comes not from CD and download sales, but rather from licensing songs to television shows and video games. Licensing, for better or worse, is a far easier way to make money in the music business than selling records, at least in this day and age.

Anyways, this reader has a particular issue, where the music director of an ad agency has contacted him saying they'd like to license a particular song, and rather than provide him with a dollar amount, they have asked him to name a price. If you're not an established artist, this can be a fairly sticky situation to be in. You don't want to scare off the MD, and thus lose both the income and the promo, by naming too high a price. Neither do you want to lowball yourself.

Personally, I'm of the opinion that the licensee should provide you with a figure from the outset. I think it is fairly bad form for them to come to you and ask you to come up with a figure, especially since the money for music licensing was set aside in the original budget (and probably got chewed away at to pay for the catering or car services anyways) and they have a set dollar amount to work with.

In a situation like this, when they ask "how much do you want for Song X," I would just reply with "what's your budget?" and leave it at that. It's worth mentioning that I'll usually not turn down a licensing opportunity, no matter what the money involved, as long as I'm not morally opposed to the project, especially with television, as the ASCAP checks are my bread and butter. In this particular corner of the Business, relationships are everything, and we have found through long experience that the more relationships you have, the better your chances of getting your material licensed.

So while you're stewing on that, here's another question to ponder: the normal practice would be to charge more for a song with a proven track record (e.g. chart position, previous licensing, etc.) but in this day and age, when most MDs can find music for free with a little legwork, there's a real danger of pricing yourself right out of your own market. That's just my opinion, and I haven't, as yet, actually found myself in a position where I had to negotiate a dollar figure.

So, anyways, those are my brief thoughts on the subject. This is a licensing open thread. Have at it.




Nov.07.2007 @ 6:17 AM
seems to be a more and more popular policy these days to ask the potential licensor for a quote for a potential usage. happened to me not too long ago. it is extremely difficult to come up with a reasonable quote and all you can do is measure territories, term and kind of usage.
in my case, it was not tv, but proper advertising, worldwide, all media.
tv synchs seem to have gotten cheaper and cheaper these days ... depressing.

Nov.07.2007 @ 10:13 AM
It's a constant struggle. You want to believe that people would rather pay to license a quality song than use an inferior one for free, but it's a less-than-comforting assumption. Here at Burst we talk a lot about how the licensing world will be affected by the trend lately to devalue music, and how we can be ahead of the curve, but there's no clear future for our industry. It's all just kind of gray right now.

Nov.07.2007 @ 10:36 AM
Thanks for running with this idea Chris, I really appreciate the chance to learn a little more about the mechanics of the process.

I agree that it's bad form for the ad agency to ask the licensor what they would like for a fee when they already have the money set aside. It just seems like an attempt to possibly save some cash if the artist or label low balls them. When faced with that situation before it seems that if I have a couple of conversations with the licensing agency and don't name a price they end up just telling me what the budget is and we move forward from there. I think in the future I will just come out and ask and simplify the whole process....

Now, a couple of questions-
How important is a lawyer to this process if you are just a small label like me or an artist? It seems like the contracts can be dealt with pretty easily, and I've never utilized a lawyer in the past in this capacity, but I'm always a little nervous that I'll overlook a little detail or just accidentally pass by something in the contract and thereby screw myself out of some money. Are there any common sneaky things that people try to include in cortracts that little guys like myself should look out for?

What about licensing in Europe as opposed to the US? My current offer is from Italy, but they will also be running the ad again later in the year in 6 other European territories (but not again in Italy). I'm a label, so I own the master- do I negotiate a seperate fee for Italy and then another fee for the other European countries, or is it all covered by one master useage license that I grant to the ad company? I'm assuming that there will be a seperate fee since the ad is not running concurrently, but I'm not positive.

As for my artist, if he is to collect residuals from the ad airing in all those European countries, does he have to register with an ASCAP-type agency in each one? With a previous licensing deal for an ad in the UK, the artist had to register with a British performing society in order to collect residuals. I know the EU has been trying to unify the collection of royalties in member countries, but as far as I can tell it's been stalled in court for a year or so. Anyone know anything about this?

Anything else that people may want to post as words of wisdom would be great. The licensing process is a great way to make some decent cash but it can be a little overwhealming at first if you're just a small label or artist and don't really know much about the process.


Nov.07.2007 @ 10:40 AM
how about some concrete examples? from personal experience, and experience of friends in the biz:

composing for u.s. tv spot: 15-25k
composing for european tv spot: 5-15k
composing for cable television series: 3k
license for console game: 4-7k
license for hbo series: 8k (dvd release = another 8k)
licensing a song to a beer commercial in 1997 when music licensing was much more lucrative? 150k.

yes, that should read like a certain credit card commercial.


Nov.07.2007 @ 10:53 AM
@atari 5200:
imo if you're at all smart a lawyer is not absolutely necessary, but mostly depends on if the figure discussed warrants it. once you get to a certain number, you will definitely want a lawyer involved.

things to look out for:
make sure your publishing is in line.
for u.s. work at least, join the musicians union. you'll not only get your publishing residuals but will get paid for the performance per licensing cycle. its not a ton, but the musicians union has added another 2-3k for me.

re: territories. i'm guessing for italy you'll be agreeing to "europe" as the licensing territory. aside from the u.k. i've never seen individual countries listed as territories. but do specify this because you are entitled to additional license fees if they choose to air the result in additional territories. also, the timespan will generally be something like one or two years, after which if they want to keep on airing they will need to renegotiate.

re: registration. he/you only needs to be registered with ascap. they interface with international agencies to get your money. thanks to ascap, i get an additional $1.48 every time real world vancouver airs in poland!

overall, keep your shit wary of any part of a contract that says "...any and all media" or "...shall be the universe" or "...forever". those words are common for work for hire, but when its for licensing, never give away too much.


Nov.07.2007 @ 11:27 AM
Thanks for the information Scientist. I agree regarding the lawyer issue, I've managed to do fine without one so far but in the back of my mind I always wonder if it's just dumb luck....

I actually just got an email from the licensing agency and they are planning on negotiating a fee for each territory seperately rather than just one fee for Europe. That seems a little strange to me but it also means I'll be making more money so I'm fine with it!

One aspect of this licensing deal that I haven't come across yet is the useage of the track on the corporate website. What is a fair licensing fee for something like this?


Nov.07.2007 @ 4:56 PM
Chris Randall
That is odd. In my experience, it's generally either one territory or The World. I've never had a situation where each territory was negotiated separately. Talk about making work for yourself...

Viz. the lawyer issue, I very rarely use mine for licensing. Once you've read a few, you'll rapidly know what to look for. Just make sure that the word "exclusive" doesn't appear anywhere, and that there are reasonable renewal clauses, and you're good to go.

As far as usage of the track on the corporate website, that should carry a fairly hefty premium, and be noted explicitly in the license, or even have a separate license.

One thing I forgot to mention; atari5200 probably knows it, but for others that aren't familiar. There are actually two fees under discussion when a song is included in a moving picture of some sort. There is the master use fee, paid to the owner of the rights to the recording, and the synchronization fee, paid to the owner of the copyright of the song. The party negotiating the license will negotiate both fees (or "sides" as they're called.) So one of the first things you need to know when the licensee throws you a figure is "per side" or "all in."

So if they say "we want to license Song X for Television Show Y, and we want to pay $2500," if they don't qualify any more than that, the very first thing out of your mouth should be "per side or all in?" $2500 per side would mean a check for $5000; $2500 goes to the publisher to be given to the songwriter, and $2500 goes to the label to be held against the artist's recoupables.

If it's "all in," that $2500 is the full amount, and has to be split in half, obviously.



Nov.08.2007 @ 5:23 AM
I am starting up a music production company in Iceland, and while we know our way around the studio, this is something that quite frankly we will have to learn.

Where can I find more relevant information on licencing and have a look at contracts to compare examples?


Sep.17.2008 @ 5:22 PM
This was really helpful!
I know it's a way old thread, but I'd love if someone could answer DonPedro's request for info. I could use any help as well.



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