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May 16, 2010
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Music CopyrightRoyalty Free Music

Royalty Free Music – Licensing & Copyright

Premiumbeat.com attorney, Patrick Curley, an entertainment lawyer specialized in the Music Industry reviews the basics of Copyright and Music Licensing.

At Premiumbeat.com, our business is selling licenses to use music in multimedia and traditional media productions. By providing royalty free music we make this process exceptionally easy for our clients.

Nonetheless, it’s important to understand what copyright means, how it applies to music, and how clients can obtain the rights to use one of our songs, or any other song for that matter. Terms such as “royalty-free music”, “stock music”, and “synchronization licensing”, get tossed around loosely, and this adds to the confusion. Hopefully this mini-tutorial will shed some light on this.

A TALE OF TWO COPYRIGHTS: COMPOSITION AND MASTER

Copyright is intellectual property. If you own the copyright to something, it means, quite simply, that you have the right to decide who can make a copy. Copyright is the right to copy. Obviously it’s more complex than that but we’ll keep it basic for now.

In terms of music, the key thing to understand is that each recording of music actually includes two distinct copyrights:

1. The copyright in the song itself, or the musical composition, or simply the Composition. This means the rights in the words and music of a song, and is often referred to as the ‘Publishing’ rights. Think of an old-school songwriter sitting at a piano, writing music and lyrics to a song. That song exists before it is recorded. Often musicians (especially in electronic music and hip hop) have a hard time grasping this distinction because they write music while they are producing it – sitting at their computer. Copyright is formed when you write a song, by virtue of the fact that it is new and original and takes a graphic form, such as writing down the lyrics or doing a demo. The copyright in this Composition is owned by whoever wrote it, until they assign or sell those rights to a Music Publishing company. There is no legal requirement to register a copyright with the copyright office in your country, and registration does not create the copyright, but it does serve as evidence of its creation. This can be an important tool in copyright infringement cases.

2. The copyright in a sound recording, also known as the Master. The Master is a recording of a Composition, so in a sense the copyright to the Composition is embedded within the Master. The copyright to the Master is owned by whoever produced it. Often this is a record company. To illustrate this, think of a famous song such as “Georgia on my Mind”. Each record company that produces a version of that song owns their recording, but the fundamental rights to the composition remain with the original publisher, who owns the Composition – the copyright of the song itself.

MUSIC PUBLISHERS AND RECORD LABELS

The business of a record label is basically to generate money with the Recordings. The basic business model historically has been to manufacture products (vinyl records, CDs) and sell them in stores. It’s a manufacturing business, essentially the same as selling widgets.

Music publishers generate money with songs. For the most part, this is a rights administration business. The music publisher controls the copyright in a song, and that entitles it to revenue when the song is used. Here are the main sources of revenue for music publishing:

1. Public Performance Royalties. These royalties are paid by anyone who ‘publicly broadcasts’ music, for instance on radio and television stations, live performance venues, retail outlets and yes, even elevators. In Canada, this is administered by SOCAN. In the US, there are ASCAP, BMI and SESAC. Most other territories have a similar organization – referred to as a PRO or Performing Rights Organization. Keep in mind that the royalties are paid by the broadcasters, not by the producers of a program such as a TV show. The broadcasters have to pay a certain percentage of their annual ad revenue to the PRO for a license to use all music. The PROs then pay the composers and publishers for the songs that were broadcast.

2. Mechanical Royalties (also called mass duplication royalties). These royalties are basically the publisher’s cut for CD or DVD sales. Since a Master Recording is a reproduction of a Composition (the Composition is embedded within it), the record company has to pay for the right to do this. The rate for CD duplication is set by negotiations between associations representing the labels and publishers (in Canada), and by the copyright board in the US. This is why the mechanical rate is often referred to as the “Statutory Rate”. The same principle applies to DVDs, except that the price is negotiated on a case-by-case basis.

3. Synchronization. This is where a publisher allows someone to ‘synchronize’ music with images. This can be for many different purposes: film, TV, advertising, video games, multimedia, websites, or corporate uses (we’ll refer to all these as “Productions”). The idea is that the producer of a TV show, for example, pays to synchronize a song with some sort of a scene. Fees are negotiated on a case-by-case basis. From the publisher’s point of view, it’s an attractive proposition because you get a fee up front ( the “Sync Fee”), and you also get public performance royalties when the show plays on TV (see # 1 above).

SYNCHRONIZATION AND MASTER USE LICENSES

Another thing to understand is that since there are two copyrights involved, two licenses need to be issued to make use of a recorded song:

1. Synchronization License: gives you the right to ‘sync’ the Composition with images in your production, as described above.

2. Master Use License: This is exactly the same rights as the sync license, except it applies to the Master, the sound recording itself – the actual recorded interpretation of the musical composition.

Since the publisher owns the Composition (sync license) and the record company owns the Master, two different negotiations often have to take place, with two different contracts, for a song to be used in a Production. This can lead to complicated and time-consuming negotiations.

If a single company owns or controls the rights to both the Master and the Composition, this is called a One-Stop-Shop. This means that the company can sign both the Sync license and the Master Use license, which is less complicated and more attractive from the point of view of a film or TV producer – or anyone who needs production music.

Premiumbeat.com is such a One-Stop-Shop since it controls both the Master and the Compositions of all the music on its website.

MUSIC LICENSING DEFINITIONS

ROYALTY FREE: Purchasing royalty free music means that once you have paid the one-time fee, you can use that music as many times as you want for as long as you want without ever having to pay additional money to the licensor. There are many applications for which music must be licensed, and the traditional payment structure (in which a royalty is charged for each usage) is cumbersome and costly. Royalty-free music libraries solve this problem by offering music that can be purchased for a one-time fee and then be used by the purchaser as many times as needed.

For example: If a piece of royalty-free music is purchased to be used on a website, it does not matter if one visitor or 100,000 visitors come to the webpage – the purchase fee is exactly the same. Another example: If a piece of royalty-free music is purchased for use on a TV show, there is only the one-time fee, it doesn’t matter if the show is presented 5 times or 1,000 times. The TV show producer will never have to pay any additional fee for the music. This saves time and considerable expense.

Royalty free music does not mean that anyone gives up their copyrights or their rights to administer a song. For instance, if we license a song to you for a film project which goes on TV and then DVD, we can still collect public performance royalties for the TV performance since these are paid by the broadcaster, not by you. You only acquire the right to use the song in your production. The music is offered on a royalty free basis but is not copyright free. The music composer and the publisher remain the copyright owners.

STOCK MUSIC: Stock music is music that is produced for the specific purpose of licensing at fairly affordable rates. This music is rarely if ever released in record stores under an artist name. Licenses for Stock Music are generally non-exclusive, which means lower prices for the buyer. The Internet has drastically changed the way in which music is browsed; with today’s digital delivery methods, music may be searched and acquired online within minutes.

Generally, Royalty Free Licensing is available from a Stock Music library such as Premiumbeat.com. But Stock Music can also be charged on a Rights Managed license basis for a specific, one-time use at a rate determined by a combination of factors: duration, purpose, territory, etc.

We hope this short article helps you understand the basics of music licensing. We will be happy to answer any question if you want further information.

Patrick Curley, attorney at law
Legal advisor for www.premiumbeat.com
Royalty Free Music Library

This text may be copied in its totality and published on-line or otherwise but cannot be modified without permission.

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  • http://YourSite(Optional) Bhakti

    Hi- Another great article! I have a question…first of all, back in the mid ’80s (while in high school) I used to copyright my 4-track demos at the Library of Congress. Now, 25 years later, I have a MySpace page to keep in touch with my musician friends, but I don’t put my music online because the newer music isn’t copyright registered. Are you stating that my music–that I composed, produced, and performed 100%–is automatically copyrighted? I feel like I shouldn’t put ANY of my music on the Internet unless it is copyright registered. Do you agree?

    • http://Premiumbeat.com Gilles

      Here is a text from Canadian Publisher website: Copyright happens as soon as it’s created and fixed to a medium (paper, CD, Record etc.) from which it can be reproduced. Even though copyright begins at creation you should still make steps toward protecting your intellectual property. The most inexpensive way is mailing yourself a copy of the song with lyrics included as well as the date it was written, writers involved and the recording date. Send it via registered mail and then do not open the package and file it, this way if there is any confusion in regards to who wrote the song first you have proof. The second way is by immediately joining a performing rights society and registering the song with them- SOCAN, BMI, ASCAP, PRS, etc.

  • http://YourSite(Optional) Peter

    Great article, have a few clarifying questions…

    If I buy a royalty free song, put it in my film and then put the film on my homepage. Do I become a broadcaster and have to pay public performance royalties for the Internet, like a TV-station?

    Also, about Youtube, are they the broadcaster or am I, when I put the film on their site?

  • http://YourSite(Optional) Ryan

    So what your saying is:

    If I sold a royalty free piece of music form a royalty free site for 60.00 to a TV production. That production company would than submit a cue sheet to ASCAP with the writer and publisher information, and I would receive money on from ASCAP on the back end that they have collected from the network broadcasting fees? So it would be in my best interest to provide the production company with my writer and publishing info so they can submit it and I can get paid from the broadcasting fees by ASCAP? And I’m of the understanding that NONE of this has to do with the license agreement between me and the TV production, all they have to do is submit my track information on the cue sheet and than it’s in ASCAP and the networks hands, right?

    GREAT article by the way, very helpful!

    • http://Premiumbeat.com Gilles

      In fact it has to do partly with the Royalty free music library and the contract you have with the owners of that library. It varies a lot from one library to another. Then it also depends on the type of agreement between the licensor (the library) and the end user. The cost of the license may or may not include the performing rights (that may depend also on the country where the broadcast is done). But in general yes, cue sheets should end up being sent to ASCAP (in your example) or any appropriate PRO, and the performing rights organization will then send the appropriate royalties to the composer and to the publisher. And yes it is important for you to supply the library with all the PRO info (Composers, Publishers) so the cue sheets can be filled with the right information provided by the library to the producer.

  • http://www.ackeanmusic.net Pamela Royal

    I am wondering where I can find these contracts for my own use: SYNC LICENSE: PERFORMANCE LICENSE; MECHANICAL LICENSE; CO-SONGWRITER CONTRACT; CO-SONGWRITER/PUBLISHING CONTRACT. I can’t find it on this disc from THIS BUSINESS OF MUSIC? tx Pamela

  • http://www.kingdomcomeforever.com Lou

    got an email from a record company in the UK that wants the non exclusive right mechanical license to manufacture only and sell 1000 records and pay me a one time buy out fee/advance for that 1000 records………..they will probably sell the vinyl for about $ 9 to $14…………trying to determine the price for that 1000 units….any suggestions………….Lou

    • LasBegas Hofvada

      Selling any of your songs that created by you or composed only by you is a form of selling your soul, I mean, you write songs for the people and yourself, that is a form of wanting to be heard and understanding what your fans want, now ideas sale go with that,don’t be confused cause yes we make albums to sale, but that is a whole and also a project that we wanna get paid for our talent, never sell ya lyrics, once they own your lyrics they own you, n they can do whatever they want once you do that, just think if you did that n was a role model, they can destroy your whole image sponsoring or putting out your music the wrong way.LASBEGAS HOFVADA 10/4 over n out

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  • http://YourSite(Optional) truthnut

    I wrote the lyrics for a song back in 2009. I finally asked a friend who is also a writer/musician to help me get the melody and my performance of it recorded as a demo. I gave him the chords for the melody. He helped me arrange a few words to fit the beat better and he engineered the instumentals all on computer. He and his father asked me to pay “around $400-500″ for the project. My friend invited his father in to help us (he is a musician too). I had a hard time getting them to listen to me and record as I asked. They even added their own background voices to my master without asking me. Now that we are almost finished, this father wants me to copyright the song totally split 3 ways….me, his son and him. I wrote this song years ago and told them the melody and style I wanted. I paid $400 so far. I have sent myself a poor man’s copyright, but I may not get the polished master or a cd without vocals. Do they have any rights to my song?

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