Licensing Revealed: The Little Secrets of Music Licensing

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[By Cheryl B. Engelhardt, CD Baby MemberThe following contains excerpts from her e-course “In The Key Of Success: The Five Week Jump-Start Strategy.” You can get your copy with a killer 70% discount using the code CDBABE.]

Figuring out all the different ways to get paid has taken me years. This article is meant to consolidate and summarize some of the big concepts, and to get you to a point to where you can have a conversation with a publishing house, licensing library, or music supervisor, and be “in the know.” The main ideas to understand are:

1. the difference between Publisher’s share and Writer’s share;
2. what master, mechanical, and sync licenses are referring to;
3. who pays what, and how you get your cash.

1) The difference between Publisher’s and Writer’s share

One song is broken into two equal parts, or “shares”:

Writer’s share

• “Writers” include anyone who contributed to the song, specifically lyrics or melody (which are usually split 50/50), and occasionally a song-defining element (like the bass line in the White Stripes hit “Seven Nation Army”). This needs to be decided and in writing before you register the song with your PRO.

Publisher’s share

• “Publisher” includes anyone the songwriter has assigned to hold the copyright of the song. The Publisher’s share can be split between your publishing company and anyone else, including another publishing company, a music library, or a music supervision company.

2) What mechanical, sync and master licenses are referring to

Mechanical License: You, the artist, need this license if you want to record someone else’s song so that the proper songwriters and publishers get paid if you were to sell this song on a CD or digitally.

Synchronization License: Anyone who wants to use your song in a media format (TV show, film, digital video) needs one of these to have permission to do so, and to ensure the correct songwriters and publishers get paid.

Master License: This is required, in addition to a sync license, for the usage of a song’s specific recording. If the song being licensed is a cover song, the new master license would be in reference to the new recording of the song, not the original version.

3) Who pays what, and how do you get your cash

After you sign a licensing deal (more on how to get a licensing deal in the full version of the ecourse), and the licensor wants to use your song in a media project (film, TV show, etc), you may be offered an up-front “sync fee” to be paid to you directly. If you have a publishing company, they may handle this and take a small administrative fee and then pay you the rest, depending on your deal with the publishing company. After the program airs, the licensor (usually the TV show or film’s music supervisor) is required to submit a “cue sheet” to the Performing Rights Organizations who then collect money from the stations and programs and divvy that money out to you. (Note: this process can take over four fiscal quarters, meaning that by the time you see the cue sheet in your account, you could be waiting up to a year to see any money.)

More on PROs: There are three PROs in the United States: ASCAP (The American Society of Composers, Authors, and Publishers), BMI (Broadcast Music, Inc) or SESAC (not currently an abbreviation for anything). You can join only one at a time. These societies collect performance royalties and distribute them to you. These royalties could come from live performances, radio airplay, TV placements, and commercial placements.

Other companies to know are Sound Exchange, Limelight, and Harry Fox agency, as well as Screen Actors Guild (from which you would get paid if you sang on a jingle commercial, or appeared onscreen with your band).

You should set up and register your own publishing company with your PRO, as soon as possible. All you need is a name. It can have the same address, tax ID (i.e. Social Security number) and everything as you, the writer. If you do not have a publishing company set up and you get a placement, you will be missing out on 50% of your money! Publishers own the synchronization rights and the artist who recorded the song owns the master rights to that song. Which means, if you recorded a version of a Billy Joel song, you would get the mechanical license from Billy (or his publishing company) to be able record it. If your recording of Billy’s song got placed on a TV show and the show paid out a synchronization fee, Billy would get all of that, as well as any Writer’s share in the back end. You would sign a master license and get paid for the master usage of your recording.

Confused yet? Don’t worry, so was I. The summary is that you need to know who did what for the song, have a publishing company, and register every song with a PRO.

Signing the Deal

There are many different ways a musician could get paid for the use of their music. The following list covers the most common kinds of usage deals, and what they mean for the ownership of your track:

  1. Exclusive Buy Out (a.k.a. “Work-For-Hire”): This is when you are paid a one-time fee, generally for creating music specific to a project. Often, you turn over 100% ownership of the track which can be resold without future payment to you. With smaller budget projects like indie films, you can negotiate that you retain 100% of the rights, meaning that you could sell or license the music you created at a later date. I try to do this on projects that will probably never turn a profit.
  2. Partial Buy Out: This is where you will get a fee upfront to create a specific track and then a percentage of any synchronization fees plus all the Writer’s share in the “back end”. Back end refers to the money paid to you by your Performing Rights Organization.
  3. Exclusive License Deal: This deal usually does not give you a fee upfront, nor are you creating specific music. You are generally sharing the rights to a song or track with a publishing company (usually 50/50, though some companies with an old- school mindset still retain 100% of all of the publishing) and you keep all of the Writer’s share. You may also hear about “re-titling,” where a publishing company will re-title your track so they can claim money for it and allow you to keep the rights of the original master.
  4. Non-exclusive License Deal: This is the kind of deal that several publishing companies, stock music libraries, and music supervisors draft up. This means that you have given them permission to use your music, but you can also shop your music around to other non-exclusive sources. Many of these deals end after 1-5 years. If your music gets placed, you will retain your Writer’s share and the agreed upon amount of the Publisher’s share.

Now that you know how you’ll get paid, from whom, and what kind of deals you could be signing to get the paying gig, the question now is “How do you get the deal in the first place?” 

Finding $: Expanding the Box

People have always told me that to be a freelance musician, a singer/songwriter, or anything that is “non-conventional”, I had to really “think outside the box.” I’ve developed my own theory: Expand the box. The “box” has gotten a bad rap. I see the box as my life. Sure, I want a box with an open lid so that my possibilities are endless. But it’s still my box. Why would I want to spend all of my career and life outside this box, when I’m working so hard to be comfortable in the box? When I find something that works that is outside of the box, I bust the walls out, and expand it. This is what this course is really about. You will find new ideas and opportunities, figure out which ones work for you, and add them to your box. We’ll examine a few areas where it’s helpful to explore unorthodox ways of going about creating these opportunities. Then you’ll get started on finding your own.

Look beyond TV shows and films to place your music. Develop relationships with online content creators. These folks are accessing a new niche of media that needs music. They will be the future viral video directors, TV writers, and film producers. While much of online video content production has smaller budgets and less chance of continued income, the opportunities in this arena are really limitless and may be worth your while to check out. Look into web series, viral YouTube videos, and animation sites.

If you are looking to break into the world of indie films, a great place to start is Craigslist. My sneaky and fun way of getting a few music placement and film composing gigs is looking up film auditions on Craigslist, going to the audition (no, I have never been cast… yet!), and bringing up that I am interested in being involved with the film in their post- production process, and letting them know I can be a music resource. I usually get a call- back… and not for the part. (Note: If I am offered any part, I would take it. Do not waste these people’s time by showing up to an audition with no intention of taking a part. That would be super jerky of you.)

Lastly, keep creating music and finding people to create music for and with. Co-write as many songs with as many different musicians as possible. Go to filmmaking network events. Meet producers, music supervisors and film directors. It’s simple statistics: The more you are out there, the more people you meet, the more opportunities there are for making money through music.

Cheryl B. Engelhardt is a composer for films, ads and CollegeHumor.com, and a singer/songwriter who’s booked a bunch of tours around the USA and Europe and gotten her recorded music placed on TV shows and ads. Her website is www.CBEmusic.com. You can follow her on Twitter @CBE. She just released “In The Key Of Success: The 5 Week Jump- Start Strategy,” an incredibly valuable and effective E-Course for independent musicians on how to jump-start their careers to radically change the results they’ve been getting.

If you liked this article, you should seriously go right now to get the rest of Cheryl’s E-course. She guarantees you will get results that you want, or money back. And because you are a loyal CD Baby reader, you get a ridiculous 70% discount off the normal selling price by typing in CDBABE when you go here: http://www.cbemusic.com/ecourse. Go now. Your music career is begging you.

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