The following is not to be construed as individualized legal advice and should not be relied upon without seeking specific legal advice.
Congrats! You’re finally at a point where you can consider adding music into your film, production, or other type of audio-visual content. But you have no idea where to start.
“Who do I talk to?” “How much does it cost?” “Is it really that hard to use a Prince song in my content?” Well, we’re here for you; not only to tell you that Prince is amazing and rarely licenses his songs to anyone, but also to help you swim the murky waters known as “Music Licensing.”
In order to understand how much it may cost to use a certain song in your content, you’ll need understand the basics. Part 1 of this two-part series will do just that.
Wait, there are two copyrights?
That’s right, there are two pieces of copyrighted material to address in every song:
- The Composition
- The Master Recording
These are what are known as the two “sides” of a song. On one side, the “Composition” refers to the “writer’s side” of the music — the score, the lyrics, the chord progressions, etc. On the other side, the “Master Recording” refers to the specific recording of the song — the actual recording that you hear playing through your speakers, headphones, chip implanted in your brain, etc. There can be various Master Recordings of a Composition, but there can only be one true Composition of a song (generally speaking, of course).
Here’s a scenario that further explains this concept while referencing my ‘90s upbringing; any similarities to any actual bands and people are purely coincidental:
Many punk bands in the ‘90s recorded and released cover songs of “oldies” from the ‘50s and ‘60s, turning them from sweet songs for slow dances to fast-paced songs for mosh pits. Initially, there were two sides of the original ‘60s song: a Composition for the original writing of the song and a Master Recording for the original recording of the song. When the ‘90s punk band recorded the cover of that original oldies song, they created a new Master Recording. Now, for that one original Composition, there are two related Master Recordings: one for the original slow-dance recording and one for the ‘90s mosh pit punk recording.
You’re probably thinking, “That’s great, but why does this matter?”
Well, in order to properly use a song in your content, you will need to get permission — or, in industry terms, obtain a license — for both “sides” of the song. For example, if you want to use the ‘90s punk recording of the ‘60s oldies song in your content, you will need to obtain a license for ‘60s Composition, known as a “Synchronization License” (or “Sync License” for short), and a separate license for the ‘90s Master Recording, known as the “Master Use License” (or “Master License” for short).
With great (song) power comes great responsibility (and ownership)
To make things more complicated, there could be multiple owners on a side. If the ‘60s Composition was written by two songwriters, then you may need to obtain two Sync Licenses for that Composition.
After obtaining the two Sync Licenses for the Composition, you’ll need a Master License for the ‘90s Master Recording. Let’s say this song was recorded by a ‘90s punk trio, and those three bandmates each own shares in the Master Recording. So, on top of the two Sync Licenses, you now need to obtain three Master Licenses to use the ‘90s Master Recording in your content.
Life could be simpler, but that’s rarely the case in music licensing.
United Nations of Song Ownership
With two sides to the song, and a potential for multiple owners or “rights holders” on each side, the lines can get messy in determining who to pay and, most importantly, how much to pay for each license.
That’s where the “Most Favored Nations” (“MFN” for short) clause comes into play.
Now, I could go into the legal history of how this clause came into play (if you’re a history buff, it’s actually a very interesting timeline dating back to 17th century trade treaties and tariffs in Europe, and you can read more about it here), but this is a music blog, so I’ll focus on how it pertains to licensing.
Generally, the MFN clause works to ensure that the seller agrees to give the buyer the best terms that it makes available to any other buyer. As applied in music licensing, a licensee must agree to pay all rights holders equally based on the “most favorable” terms. This can refer to the many legal clauses in a license, but it essentially comes down to one factor: MONEY. Channeling the iconic words of a Mr. Man, first name Method, cash rules everything around music … or at the very least is a driving factor when licensing is concerned. If one owner is getting paid a certain amount, a co-owner will want to get the same amount.
Confused? So am I, so let’s jump back to the example.
Let’s say you’ve already struck a deal with one of the two co-owners of the ‘60s Composition, (we’ll call him “Adam”), for a rate of $50.00. Let’s assume each owner owns a 50% share in the Composition and all licenses will contain a MFN clause. If you go to the second owner of the Composition, we’ll call him “Bill,” he may decide that he won’t grant permission to use the song for less than $200.00. If you agree to Bill’s terms, because of the MFN clause in Adam’s license, you will now need to pay Adam $200.00 as well, instead of the $50.00 you originally agreed to pay.
And that’s just the Composition side.
After obtaining the Sync License for the Composition, you go to owners of the ‘90s Master Recording, and because they still like each other and tour small venues regularly, they collectively agree that they won’t give permission to the song for less than a total of $1,000.00. Because of the MFN clauses in both Adam’s and Bill’s licenses, you will now need to pay a total of $1,000.00 to Adam and Bill, so $500.00 each. So, because of the MFN clause, what started out as a $50.00 license has now grown to a total of $2,000.00 — $1,000.00 to Adam and Bill for the ‘60s Composition and $1,000.00 to the punk band for the ‘90s Master Recording.
**Fun, right? **
Well, now you know the basics: the sides and the players involved in the game. These are the two major factors in what determines the price of a license. As you can imagine, the more people involved, the more complicated it can get. But before you go out and say, “man, that’s unfair, why can’t I just pay one person less than the other?”, just remember the simple concept that goes back to our days in grade school: Treat everyone fairly.
Artists put a lot of time and effort into creating these works of art, so everyone involved with that work of art should get equal treatment, be it in compensation or recognition.
Stay tuned for part 2 where we break down the basic terms of a license and how those terms factor into the eventual license fee. Until then, in the headbanging words of my ‘90s mosh pit past, rock on, dear reader. Rock on.
By: R.J. Inawat, Corporate Counsel, Music Dealers