Music Licensing: A Short & Comprehensive Guide On How To Stay On The Safe Side Of Copyrighting
Avoiding copyright infringements while getting paid for producing music: all you need to know + some ultra famous copyrighting clashes
The music industry has been taken by surprise with UMG filing a half a billion bucks lawsuit against Believe Music, one of the biggest music distributors. The case is built around an immense amount of music published via Believe, that allegedly infringes copyright to a huge chunk of UMG’s back catalog. Heavy words like “piracy”, “industrial-scale copyright infringement” or “eschewed measures to prevent copyright violations” were thrown on the table, raising concerns from the independent artists whether they won’t wake up at some point with a multiple zeros figure amount to be paid to some major label signed artist.
Let’s be honest: where there’s smoke, there’s fire. Sped up and slightly remixed versions of famous tracks blew up on platforms like TikTok and even youtube, somehow cheating the Content ID systems enforced by the DSPs. Fake artists like Arriana Gramde or Jutin Biber don’t mock up the OG artists, but deliver millions of streams to slightly remixed famous songs, much like Abibas or Mike ramp up sales for shady Chinese sneaker manufacturers. Picking up trending songs and using AI-based music software to quickly release a deep house remix, just to ride the success waves of original remix, is a common practice. Just think about this: create an unauthorized remix, build a subscriber base on youtube based on these remixes (even if you cannot monetize them) and then release from time to time generally mediocre original tracks that would rack thousands of streams!
I guess it’s time to dive a bit into what music licensing means, so you can sleep without fearing the copyright monster.
Music licensing has been a topic since the dawn of time. Like a living organism, it evolved and adapted to various issues and fine printing (hard to imagine, but now even the “feel” of a song can fall into copyright discussions). The best example is the famous Amen Break: a 6 seconds drum sample that has become one of the most sampled and iconic beats in music history, especially in genres like hip-hop, drum and bass and electronic music. While the original creator, Gregory C. Coleman, the drummer for The Winstons—was never properly compensated for its widespread use, the Amen Break legacy is that music licensing has begun to address sampling.
Music Licensing: a (very brief) definition
Music Licensing is the legal process of obtaining permission to use a song, recording, or part of a musical work for a specific purpose. While the purpose can take various forms, the permission is always granted by the copyright holder: the artist, the composer, the record label and in some cases the artist’s mom :D Licensing ensures that creators are compensated when their music is used in various contexts, protecting their creative and financial rights.
In other words, creators are paid whenever the music is used, during their lifetime and an additional 70 years after they become angels. Directly related to how much your music gets played (remixed, sampled, in its original state or whatever), this ensures a passive income for years. Yes, music licensing is that important: it helps building trust and also a long-term career growth.
Types of Music Licenses
As you can imagine, there are several ways the music could get licensed. We’ll just list the most important ones
Sync License: covers film, TV and advertising. As music is an integral part of a movie, music composers must be compensated for allowing their music to enhance the emotional impact of various movie scenes.
Mechanical License: covers reproductions and physical or digital distribution. When a song is covered by another artist or included on streaming platforms, a mechanical license is required. This compensates the original songwriter for each copy sold or streamed.
Performance License: covers public performances. Radio stations, concert venues, and even coffee shops need public performance licenses to legally play copyrighted music to the public. Performing Rights Organizations (PROs) like ASCAP and BMI, and also local PROs handle these licenses and distribute royalties.
Master Use License: covers the use of a sound recording. Any producer that uses a full song, a loop or a sample from another copyright protected work is required to obtain a master use license to legally sample the recording. This permission compensates the owner of the original sound recording.
Now that you know what type of license you need, it’s time to legally obtain it! And this brings us to…
The Licensing Process: A Step-by-Step Guide
Step 1: Identify the rights holders: If the track name is known (if not, Shazam it!), then the best starting point is SoundExchange’s ISRC Search: this website will provide the ISRC (International Standard Recording Code) of a song and also provide the right holders’ name (at least the artist name and the record label that released that specific song). MusicBrainz.com and PRO databases (ASCAP, BMI, SESAC, PRS, GEMA, etc.) are valuable tools, also. At least you can see if the track is protected by copyright.
Step 2: Negotiate terms After getting in contact with the rights holders, it’s time to negotiate the license. This should include specific criteria, with the most common ones being the duration of the license, territories covered and the type of exclusivity. Based on this criteria, it should become clear for both parties how to valuate the licensing contract.
Step 3: Get written permissions & Document everything. No need for a signed-in-blood contract, but it should be more than a verbal approval. A solid and well balanced contract should be the stepping stone for a licensing deal. The contract should cover the negotiated terms, the compensation or royalties (flat fees, revenue shares, royalty shares etc), the granted rights (the more clear this section, the less headaches in the future) and also the ways to avoid or settle legal disputes. It’s that moment when most of the artists abandon the licensing idea or hire a lawyer 😅
Speaking of which, we sat down for a little chat with Traian Paicu, one of the most experienced copyrights lawyer in Romania, with a career that spans over more than 20 years in working with A List artists as well as underground ones. We asked Traian a few questions to shed some light on license agreements from the legal point of view. He’s also the founder of Soundfeed, the music platform that uses technology to streamline the licensing, distribution and revenue sharing processes for independent artists and labels, regardless the size of their back catalog.
Q: What are the most common mistakes people make when negotiating music licenses?
TP: Presuming this is a question related to territorial or digital licenses, that's a great question, and not for a very obvious reason. Taking a step back here, I think the most common mistake is that musicians and labels don't use the licensing, as a development tool, enough. In other words, yes, there could be different approaches in negotiating a music license, some of them possibly being perceived as mistakes, but being in the position to negotiate a music license is already a huge step forward compared to the majority of song owners, who don't even consider doing a license at all.
Diving deeper into your question, here's a few common "mistakes"
Licensing with the sole consideration of an advance. A common mistake here is to have as the sole goal the receiving of an advance, without consideration to what's being done throughout the license term for promoting and administering the track.
Another common mistake related to advances is to think, as a licensor, that the advance alone will be enough of an incentive to prompt a good performance from the licensee's part. I think that the provisions related to promotion activities and making available, as a licensor, all the support needed by the licensee for them to do their work.
It's never enough to emphasise the importance of rights clearing and licensing. Especially in the times of modern production means, streaming and AI.
Another common mistake is to license solely in consideration of the major label status of the licensee. I've always considered that the label to artist connection should happen at the level of most likely priority. And that's also applicable to the label to label relation that a license creates. As an independent label or artist, receiving attention from a major label is in itself a great achievement. But if the level of priority that you receive, and in the case of a license the track receives, is not high, then it is very likely that the license itself will not bring the desired results, like breaking the artist to a new audience. Licensing to a smaller label, a niche label that has experience with the kind of song your licensing, one that can give priority to your song, will likely bring more long term success. And that's because licenses are about relations. And long term relations are built in time, and with patience.
Another common mistake is to judge the license by short term success. And especially the success of a single track. I see licensing as a tool for artist development to a remote audience (territory most commonly). As such, I don't recommend single track licensing. That can easily turn into a purely administration deal. What is likely to have more long term success is the licensing of more tracks of the same artist, able to create a longer term relation with the audience that the licensee has access to. As an actionable advice here, I suggest to licensors to accept, with caveats and protection, the option for follow-up tracks to the same licensee, and for the licensee to ask for such options, in order to dedicate more resources to the artist development, and not to the track alone.
Looking briefly at the licensee's perspective, I think a common mistake, which is related to negotiation on a general level, is to license tracks without a clear sight of what's expected from you, or a clear set of actions that you will actually be doing for the track. Missing out on this point generally leads to a poor experience, and eventually to a fractured relationship. In the same context, the inability to commit to clear reporting of what's being done is also a mistake done by licensees. That's a major factor that leads to frustration. Also from the licensee's perspective, there's often a disregard to undertakings made by the licensor or the artist, and especially the commitment to PR activities related to the license and the new audience.
Q: Can you explain the risks of using music without proper licensing or permissions?
TP: This moves the topic to a different type of licensing, and yes, it's never enough to emphasise the importance of rights clearing and licensing. Especially in the times of modern production means, streaming and AI. There are so many ways in which music can be used without licensing or permission, that I will only resume at stating the obvious. Using any music, in its entirety or in part, without the proper licensing, context always being taken in consideration, generates the risk of copyright infringement, be it author or neighbouring rights, which lead to take-downs, injunctions, damages claims, and in certain jurisdictions even criminal prosecution.
Having a good contract structure and system that tackle reporting, tax and royalty payments is necessary for the good administration of licenses.
Q: What should creators and licensees look for in a contract to avoid future disputes?
TP: The structure of most copyright licenses is similar to any assignment contract. As long as there's a clear identification of the work or song, the rights granted, term, ambit, uses and consideration, there should be no disputes. Of course, as I mentioned before, depending on the license type, both licensor and licensee may have long term goals that should be defined in the wording of the agreement.
To focus only a bit on the ambit, there could be different types that will prompt specific provisions. In a territorial license the parties may need to pay attention to uses from outside the territory that may overlap with the licensed territory, such as the intersection with a digital license or a sync license originating from outside the licensed territory. Or, reversely, uses originating from the territory that may extend to outside the territory. In a sync license one may need to look at certain limited uses of the resulting production (in which the licensed song is included), be it a TV show, movie, advertisement, that may conflict with the use of the song by the original owner, or with other sync licenses. And as a last example, a derivative work/song clearing should always consider traceability of the new work/song, in order to always respect the chain of ownership, further clearing and use of the original.
Q: Are there any overlooked details in music licensing agreements that usually cause trouble later?
TP: Not necessarily overlooked, but usually creating administrative difficulties is the royalty reporting of a license. In the same context there's the multi-territorial aspect of many licenses, that generate the need for tax considerations due to withholding tax obligations. Having a good contract structure and system that tackle reporting, tax and royalty payments is necessary for the good administration of licenses.
Another details that may be overlooked is the term, term extension and administrative actions involved in digital distribution. There are circumstances in which the termination of the agreement generates the need of takedowns, new releases and other administrative actions that must be carefully considered from the outset.
Common licensing mistakes
Failure to clear all rights - this implies covering all overlooked elements, like samples and cover versions.
Assuming that fair use applies - it’s a super thin line between commercial use and fair use, especially when we talk about music in the TikTok context, where a few seconds videos are queens of the internet nowadays. Actually, this is one of the seeds that spawned the UMG - Believe Music class suit.
Resources
If you’re into producing remixes or you’re a label looking for new music to license on a specific territory, then Soundfeed platform is the perfect start: you can get directly in contact with the rights holder, have access to a properly balanced licensing draft agreement and also to a system that automatically distributes royalty money based on the licensing contract terms.
Jump to Conclusion
Better safe than sorry… both ways. Protect your work or be sure you’re using other artists’ creations with the rights holders’ written consent. To understand the importance of licensing and copyrights, check the famous George Harrison – "My Sweet Lord" vs. The Chiffons – "He’s So Fine" (1971). This case highlighted the concept of unintentional infringement and influenced how courts view similarity in melodies. Harrison lost the case and was found guilty of “subconscious plagiarism,” paying a 1.5 million dollars settlement.