What Is a Typical Licensing Agreement?
In the case of music, the licensor is either its music video creator or the company that holds the copyright on it, that merely provides them the right to copy a piece of intellectual property, or permits others to do so. Royalties refers to ongoing payments based on usage of the intellectual property. For instance, if a popular song is featured on a film’s soundtrack, a licensing fee is typically paid upfront, followed by royalties based on how many copies of the soundtrack are sold, when the film is played on cable TV, and so on.
In the case of royalty-free music, the licensing agreement provides that the licensee soley has to pay a one-off fee, once that the licensee is free to use the music as repeatedly as they wish, while not paying additional royalties. Royalty-free music is still copyrighted, not copyright-free.
This is in distinction to rights managed music, within which the licensing party (like a radio station or a gym) needs to pay when it plays a specific song.
Three Kinds of Licensing Agreements are listed below :
Any online search can yield completely different numbers of possible licensing agreements and their components. There are three kinds of licensing agreements relevant to royalty-free music, which we’ll explore below.
1. Sync Licensing for Royalty-Free Music
The “sync” in “sync licensing” is short for “synchronizing the music to a piece of media.” That means using the piece of music against any other material — and not just visual material. It could (and often does) refer to using music in a TV show or commercial, but it can also refer to using music in:
Radio ads or podcasts, Books on tape, Meditation Music, Video Games, and other media
Forms of media come and go (like CD-ROMS replacing vinyl, and MP3s replacing CD-ROMS) however adjust licensing can still cover the usage of music in conjunction with different kinds of media.
“Royalty-Free Music” implies that a user pays for a bit of music once and so has the license to use it, forever. A one-time “sync” fee provides the user usage rights for all time, and they never have to pay another usage fee.
2.Sync Licensing for Rights-Managed Music
Sync licensing for right-managed music is completely different.
It’s the opposite of royalty-free. With rights-managed music, every year the media owner and the broadcasters should renegotiate the contract to use the music. This licensing is commonly distributed by larger labels that manage bands and acts. Rights-managed sync licenses may be quite expensive — the licenses can cost innumerable bucks if the music is used in an exceedingly high-profile context, such as in a Super Bowl commercial or as the introduction to a popular television show. For every year that the media using the music is in circulation, the contract will need to be renegotiated.
Rights-managed music may additionally involve the payment of royalties on the backend. Most popular music that’s employed in movie soundtracks, for instance, operates on this model. Performance Rights Organizations (PROs) like ASCAP are responsible for collecting royalties (and they mean business).
Royalties can be welcome for artists, however gets tough for small business owners. They represent a loads of paperwork and should be factored into an ongoing budget.
3.Public Performance License
A Public Performance license is required anytime music is played in public. The music could be synced to media or not — all that matters here is its public element. Therefore if music is played in settings like restaurants, gyms, or malls, it needs a public performance license. When music is played in public as a “music only” product, users should pay a PRO a particular fee for the Public Performance license.
When music is played in a TV show, even royalty-free music, a fee still has to be paid (and is collected by a PRO). The size of the fee varies depending on factors like audience size, prime time, and the way the music is used (for example, introductory music versus background music, the length of the music excerpt played, and more).
With a royalty-free sync license, the PRO still requires a fee to be paid. The fee is usually paid by the broadcaster, not the media producer. The broadcaster pays the PRO within the variety of a proportion of their revenue from advertising.
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