Music Placement Companies. Part 2

TThe first part of the series covered two main types of placement companies, reasons to sign up with a music placement company, as well as the difference between a music placement company and a music library. You can read the article at this location.

Editor’s note: This is an excerpt from the 4th edition of Music Is Your Business by Christopher Knab and Bartley F. Day, helping musicians with the business of music.

Evaluating Music Placement Companies

There are several things you can do to evaluate a placement company:


Image credit: Yasmine Hamdan on Flickr

  • Look at the company’s website, which will give you a good idea of the level of artists they represent. The larger companies usually have a FAQ page on their site which will answer some basic questions. The information on the website will, of course, be self-serving, but it’s a good place to start getting a feel for the company.
  • Contact some of the artists listed on the website and ask them for their opinion of the company. You’ll often need to go to the artists’ own websites or Facebook pages to contact them.
  • Talk to any solid music business contacts you have, to find out whether they know anything about the company or the people who run the company.

The Main Deal Points of Representation Agreements

The terms of such representation agreements vary from company to company, but most agreements cover at least the following main deal points:

Exclusivity vs. Non-exclusivity. Many of the smaller companies require an “exclusive arrangement,” meaning that they will be the only company entitled to pitch your music for use in movies, TV shows, etc.

Most of the larger companies do not require exclusivity, in which case you can give multiple companies the right, simultaneously, to pitch your music.

Before signing any agreement, make sure that the company is a good fit for you. Be careful. If you sign an unproductive exclusive deal, your hands will be tied from letting other companies try to place your music. And even if it’s just a non-exclusive deal, it will prevent you from later entering into an exclusive deal with another company that might be much better able to help you place your music.

Rights Granted. The agreement will normally contain a list of the rights that you’re granting to the company (for example, the right to stream your music on their website, the right to sign deals on your behalf, etc.).

Approval Rights. Sometimes the agreement will provide that your approval must be obtained before they can license your music for use in political campaigns, NC-17 movies, etc. Whenever possible, it’s advisable for you to have a right of approval over any licensing deals the placement company enters into on your behalf.

Term. The “term” is the period of time during which they’re entitled to seek licensing deals on your behalf. There is some variation from company to company, but the term is typically for 1, 2, or 3 years. Generally, the shorter the term the better it is for you, since you’ll be able to exit an unproductive relationship faster.

If the proposed term is longer than you like, try to negotiate for a shorter term, or you could ask for a short initial term (for example, one year). Then the contract could state that if they earn a certain specified amount of income for you in that initial year, they would have the right to extend the term of the agreement for another year or two.


Image credit: JeahFree on Flickr

Territory. Typically, the music placement company will have the right to pitch and license your music worldwide. If, at the time of signing the representation agreement, you already have other deals in place (for example, a sub-publishing agreement with a publisher in Europe), that issue needs to be addressed in the representation agreement. You will want to make sure the placement company agrees not to engage in activities which would in effect violate the terms of your prior agreements with third parties.

Income Split. Typically, the company will be entitled to receive in the range of 25% to 50% of the income generated as a result of licensing deals they enter into on your behalf.

Sometimes, as discussed below, the placement company takes an administration “fee off the top,” then takes their stated percentage of the remaining balance, and pays you what’s left.

I recently saw a company asking for 65%. However, they worded it differently by stating that you would receive 35%, which I suppose is intended to sound more favorable to you than saying that they (the music placement company) get 65%.

The most typical rate taken by a placement company is 50%, though some people feel that’s an unreasonably high percentage.

Whatever the placement company’s percentage share is, they will typically get that percentage of the upfront licensing fees from film and TV producers etc., and any back-end royalties (from soundtrack CDs etc). They will also receive a share of the ASCAP/BMI broadcast income if, as a result of a licensing deal, a film or TV show containing your music is broadcast and thereby generates ASCAP/BMI income.

Typically, these companies are not that flexible about changing their standard percentages unless they’re anxious to sign you.

Administration Fee. As mentioned above, some companies also charge an “off-the-top” administration fee, in the range of 10% to 15%. If so, out of every dollar they receive from licensing deals for your music, they will take 10 to 15 cents. The remaining amount will then be split between you and the placement company according to the basic percentage (the 25% to 50% percent described above.)

Re-titling. Many representation agreements say that the placement company will be entitled to register your musical composition under a new song title with the performance rights organization you belong to (usually, ASCAP or BMI).

There’s a simple reason for this. Let’s say you have a record out. One or more songs from the record are getting airplay, and therefore ASCAP/BMI income is being generated as a result of that airplay. There’s no reason why the placement company should share in that income – they had nothing to do with causing that airplay.

In order to keep that from happening, the contract will provide that the placement company can “re-title” the song and file a new “title registration” for it. The new title registration will show a new (second) title that is different than the original title. By doing so, a new (second) royalty account is created in the ASCAP/BMI database for the song.

If the song is then subsequently licensed for use in a film or TV show, the production company documents (“cue sheets”) that report such usage to ASCAP/BMI will show the song’s new title, and the placement company will be entitled to a share of that income from that usage. But the placement company will not be entitled to any income earned by the song under its original title, since the placement company’s name is not on the royalty account for that song title.

In short, if the song is re-titled, the placement company will share only in the income from licensing deals it created, and not in any income earned under the original song title.

If a musical composition is not re-titled, your own publishing company receives all of the ASCAP/BMI income directly from ASCAP or BMI. You are then obligated to turn around and pay the placement company its share of that income. Some placement companies are willing to agree to this arrangement, but most are not.

By the way, most placement companies have an ASCAP-affiliated publishing company and a separate BMI-affiliated publishing company, so that they have a way to collect their share of ASCAP/BMI income directly from ASCAP and BMI. That way, they don’t have to worry about you not paying them (the placement company) their share of that income.

Re-titling is a controversial topic in the music licensing world. Many people feel that it can complicate issues of who owns the song, and increases the odds that the placement company will receive more income than it is entitled to collect. Also, if you enter into non-exclusive deals with multiple placement companies and each of them registers the song with a different new title, you can run into problems if they then later submit the same song, with different titles, for the same project (for example, a film or TV show). It may take awhile for the party receiving the music to realize this has happened, and they’re usually not very happy about it, since they won’t be sure who they should be negotiating with.

Post-term Administration. Income can continue to be earned from licensing deals long after the term of the representation agreement ends. Representation agreements often provide, therefore, that the placement company has the right to collect that post-term income, at least for a certain period of time. If there is post-term income they are, of course, obligated to pay you your share of that money.

Warranties. Typically the agreement will contain a warranty clause, stating that you are the owner and creator of all of the material covered by the representation agreement, and that the material doesn’t contain any digital “samples.”

If there are any uncleared samples in your recordings, or if there are any other legal problems with the contents of your music, make sure the placement company is aware of it before they start pitching your material. Such problems will create major legal liability for you, the placement company, and anyone to whom the placement company has licensed your music. Also, this will seriously damage or destroy your relationship with the placement company. This is serious stuff, and you need to be absolutely upfront about any legal problems with your music.

Other Deal Points

The following deal points tend to appear mostly in the representation agreements used by smaller placement companies.

With the smaller companies, it’s easier to negotiate for changes in the agreement to your favor. With the larger companies, it’s more likely to be a take it or leave it situation.

Future Co-Publishing Rights. Some placement contracts state that if they place one of your tracks in, for example, a film or TV show, they will become entitled to a share of copyright ownership of the underlying musical composition, but not the master recording. Typically, they ask for 50% of the Publisher’s Share. In that case, for every dollar of music publishing income, 50 cents will go to you as the artist/writer (as the Writer’s Share), 25 cents will go to your publishing company (half of the Publisher’s Share), and the placement company will receive the remaining 25 cents (the other half of the Publisher’s Share).

If you’re able to negotiate changes in the agreement, you should ask for a benchmark they have to meet in order to have the right to a share of your copyrights of the songs they place. For example, you could ask for a clause stating they become entitled to a share of the copyright of a musical composition only if the licensing fees for that musical composition are at least a certain dollar amount. The higher the amount, the better for you. That way you don’t have to be concerned about them getting a share of a copyright just because they found a very low-dollar licensing deal for you.

Ownership of Masters. Typically, representation agreements do not give the placement company the right to acquire any ownership share of your master recordings.

Future Exclusivity. Some representation agreements say that if the company places a song with a particular TV show or ad campaign, it will be entitled to continue representing you for any future music licensing for the remaining duration of that show or ad campaign, even if the term of the representation agreement has expired in the meantime.

With such a clause in the agreement, if they place one of your songs in, for example, a TV show, then only they can submit your songs to that same TV show in the future, for the remaining life of the show. You’ll be contractually prohibited from ever submitting any of your songs to that TV show directly.

Exclusions. You may want to negotiate for a clause to be added to the contract, saying the placement company won’t be entitled to share in any income earned from your own self-released or any label-released records. That way, you won’t be obligated to pay them, for example, any mechanical royalties based on those record sales, even if they later become co-owners of one or more of the musical compositions on those records.

You should also have a clause in the contract providing that the placement company won’t be entitled to share in any income from deals you have signed in the past.

By Bartley F. Day, Copyright 2013. All rights reserved. The new, 4th Edition of Music Is Your Business has 100 pages more info to help musicians help themselves with the business of music.