Licensing Music For Films, TV, Commercials, And Computer Games. Part 2

TThe first part of the series covered the terms of the Synchronization and the Master Use licences, as well as common synchronization licensing issues. 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.

The Amount of the Synchronization License Fee (Paid by the Producer to the Music Publisher)

Normally the Synchronization License will require the producer to pay an upfront “synchronization fee,” which will be a flat amount paid when the Synchronization License is signed.

How big the synchronization fee will be in any given situation will depend on many factors, such as the degree of public recognition of the particular music involved (for example, whether it was a hit song in the past, and if so, how recently); the nature of the usage (i.e., use in a film versus a television show versus a commercial, etc.); and the term of the license.

Depending on the nature of the production (film versus television, etc.), there will be other considerations as well. In the case of a film, for example, there are considerations such as how many times the song will be used in the film (and for how long each time), and whether the music will be used in the foreground (versus the background), or in trailers, or in the opening or closing credits.

Even when the up-front synchronization fee is small, there can still be some very substantial public performance monies eventually received by the publisher and composer from their performance rights society (ASCAP, BMI, or SESAC), as discussed in more detail below.

Often a license agreement will contain a “most favored nations” (also known as MFN) clause, which says that if multiple songs are used in a film, computer games, etc., then if the producer pays another publisher a higher fee than you (as a publisher) have negotiated, then you’ll be entitled to receive the same (higher) amount that the other publisher has negotiated for.

Master Use Licensing Issues

Many of the issues mentioned above in regards to Synchronization Licenses are also issues in negotiations over Master Use Licenses, such as “term” and “territory.”

Just as in the case of Synchronization Licenses, an upfront flat amount fee will be provided for in a Master Use License, called a “master use fee.”

The amount of the master use fee that is charged by the record company is often very similar in amount to, or identical to, the synchronization fee charged by the publisher in that same situation.

In some instances, the record company (negotiating the terms of a Master Use License) may be more anxious than the music publisher (negotiating the Synchronization License) to have the music used, in order to promote an artist who currently has a record out. So the record company may be willing to agree to a lower fee than the publisher is willing to accept. On the other hand, I’ve often seen instances where the record company has required a higher fee than the publisher.

Sometimes there’s a large difference in the fees charged by a publisher and record company. If a small publisher or record company involved isn’t experienced in the licensing area, they may unknowingly (and unnecessarily) quote too low a fee to the producer.

Public Performance Income from ASCAP/BMI/SESAC for Publishers and Songwriters

Music Licensing

When music is “publicly performed,” (for example, music which is broadcast as part of a television show, or performed online in a computer game), the publisher of the underlying song and the songwriter will earn not only the upfront synchronization fee which they received from the producer, but also, later, the “public performance” income from the publisher’s and composer’s performance rights society (for example, ASCAP, BMI, or SESAC). The amount of this public performance income can be very substantial.

Sometimes, however, the public performance income is very low; for example, when music is used in just one episode of a show on a minor cable channel, for example. This is because of the low rates that have been negotiated between ASCAP and BMI, and the cable networks. The fact that these rates are so low has become a controversial issue in recent years among many members of ASCAP and BMI, particularly given the fact that many of the cable networks have become so profitable for their owners.

But still, there are many situations where public performance income can be quite substantial. In those situations the publisher is often willing to accept a synchronization fee significantly lower than it would otherwise be inclined to accept, rather than potentially losing the deal (and losing not only the synchronization fee paid by the producer, but also the public performance income earned from ASCAP, BMI, or SESAC for the broadcasts of the television show). This is particularly true in certain instances, such as when a song is used as the title song for a TV show, or in infomercials which are broadcast over and over for long periods of time and which can therefore generate large amounts of public performance income.

Public Performance Income for the Owners of Recordings

Bear in mind that as far as the U.S. goes, we’re talking about the public performance income payable to the publisher and songwriter of the underlying musical composition. The same considerations do not apply to the owner of the master recording (usually a band or its label). Under U.S. copyright law, the owners of master recordings, unlike the owners of the underlying compositions, are not entitled to public performance income for the broadcast of their recordings.

The rules are very different in most foreign countries, where foreign labels can earn substantial amounts of public performance income from the public performances of their master recordings in those countries.

Again, the only source of income for a U.S. owner of a master recording will be the upfront master use fee which it receives from the producer. As a result, the owner of the master recording may feel more of a need (than the publisher) to negotiate for the highest possible upfront master use fee from the producer.

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.