Music Licensing – What, How and Why It’s Important for Your Business

Music licensing commonly refers to ‘royalty free music’ or ‘production music’. This is music that has been written and produced with the sole purpose of being used in another project. Anyone can then license this music for a fee, to use in their project.

What about commercial music?

Commercial music, written and performed by artists like Adele, M83 and U2 for example, cannot be used for any purpose other than personal/private performance. When you buy a CD or download an MP3, it is specifically stated that you cannot do anything with that song or music track except listen to it yourself. Any business use is prohibited, even playing it on the radio to customers at a hair salon.

To play commercial music to the public, a public performance licensed is required by the appropriate performing rights organisation of that country. In the UK it may be PRS or PPL. In the US/Canada, it may be BMI or ASCAP. These organisations arrange a fee to the proprietor of the business, based on the size of their business/location. This can be expensive, and time consuming just to play the radio to your customers on your premises, but does permit the business to play the radio to its customers without legal issues.

This is not a suitable solution for video production and filmmaking, as the usage and purpose of music is not the same. As many video production companies produce content for clients, they need background music for their video/film that is cleared for its intended purpose. When licensing commercial music, arranging such a license for online, public performance, in-store and mass distribution quickly becomes expensive and convoluted.

Royalty free music licensing offers a simple and cost effective solution to acquiring well produced music with all necessary rights for the client, within an affordable, transparent license.

Who needs to license music?

Anyone creating digital content with the intention of publishing it online or publicly. It’s really that simple. You cannot legally use music you have not written yourself, or licensed from a music library.

What about ‘home movies’ and ‘personal projects’?

The same rules apply to home movies and personal projects, but because these are produced not-for-profit, nor professionally on behalf of a client it is possible to use commercial music in this type of content. However, when this content is published to social platforms like Facebook and YouTube, you may find your video is blocked in certain countries, or deleted entirely. This is because commercial artists and record labels have an agreement in place that monitors use of their content on these platforms, and can enforce accordingly. There is however, many commercial artists and record labels who permit the use of their music in exchange for advertising. An ad will be attached to your content as a pre-roll, overlay or half-time break during the video in exchange for permission to use their music track. If you’re producing something personal, ‘for fun’ then this shouldn’t be an issue.

The risks of using commercial music in professional video

A client may want the latest chart hit in their video because it resonates with their target audience, or they feel it represents their brand. However, as outlined previously this could end up immediately being blocked or deleted with further implications like account suspension. If the video is not blocked or deleted, then it will be served with ads.

This is the last thing you want for your client. You’ve produced a video promoting their new product, and before the video has even started, viewers are being shown ads for competing brands and products. It degrades the potential of the video and the brand.

Why license ROYALTY FREE MUSIC?

There are THREE key reasons why licensing music correctly is hugely important.

1. You’re using music that will NOT be subject to copyright claims, blocks or deletion when it is published online. This means you can deliver your end-product to your client without fear of any music related issues.

2. You can MONETISE the content you produce. If you’re producing the content for your own online channel on YouTube, you’ll no doubt be entered into the partner program, to earn money from ads displayed on your videos. You cannot earn money from these ads if the music is not licensed, as it will go straight to the artist/producer of the music. Pay for the music license, earn money from that music license. Simple.

3. Create an identity for your video. Whether you’re producing something on behalf of a client, or yourself. If you use a hugely popular, well known commercial music track, chances are that song will resonate with the viewer more than your content. However, if you create really good video content AND license the perfect music track nobody has heard before, you’re offering a completely unique audio/visual package that is new and fresh.

What about free music?

If you look for it, you will find music that is available to use for free. But ask yourself, why is it free?

Free in exchange for ads and revenue.

The creator could be giving you permission to use their music in exchange for ad-revenue online via YouTube and Facebook, and you won’t know this until you publish it and get informed ads will be displayed alongside your video, with all revenue going to the artist.

A poor quality sample

The free music track you’re using could be a low quality sample of something an artist is trying to sell. This could be a low 128kbs MP3 that appears suitable, but when played back against high quality content, will sound quiet, muted and generally not as good. When music is licensed from a library, it should be available in broadcast quality WAV or 320kbps MP3 as standard.

Who else is using it?

You won’t be the only one looking for free music. People creating content purely for personal projects don’t have a budget for music licensing so they need something free. If you’re producing a project for a client who is paying you, would they be happy with you using the same free music track as everyone else? If it’s free, chances are a lot of people will make use of it.

Clearance and Assurance

Anyone can upload a music track online. There is no vetting, no quality control or legal assurance. Any Blog or digital content platform can host a music track for others to share. So, when you’re downloading a ‘free music track’ how do you know the provider actually has the rights to provide it to you? When you license a music track from a professional curated library, you have the assurance that every single music track has been reviewed, contracted and published legally for you to license and use.

Why pay for music?

There are thousands of music tracks online. What difference is there between ‘Track A’ and ‘Track B’? As a video producer/filmmaker, ask yourself this question: “There are thousands of video cameras available. iPhones can shoot 4K video and you can plug a microphone into them. Why should a company hire me to shoot their video”?

When you license music from a reputable library, you’re paying for the expertise in writing and composing the music track. From the start, middle and end. The quality of instruments used. The production of dynamic audio, the builds and crescendos. The post production mastering and edits so that a 3 minute piece can be condensed into a short 30 second edit without losing any of the magic of the music track.

The difference you get when someone films a corporate video on their iPhone compared to someone filming the same video with a professional camera, lighting and staging is painfully obvious. It is no different when it comes to music or photography. There is the technology, the knowledge the skill and ability to combine them to achieve the highest quality result.

How To License Your Music

Music is a big part of civilization. Centuries had passed but music survived and even grew to greater heights every single decade. As a matter of fact, the demand of music has been rising very steadily in the past 10 years and it will continue that way in the foreseeable future. It comes along with the big amount of revenue the music industry is currently getting year after year. It is an unstoppable force as people always look up for the next great artist around the corner, thus continuing the cycle and the relevance of music. The demand of music content is at an all time high. The global music revenue since the turn of the century has been steady. The currency is measured in billions.

As the technology grew, music got more technical, complex and in demand. Others take credit for using music they don’t own. Nowadays, independent musicians are well aware of protecting their work for legal purposes. Through music licensing, you can be ensured of your asset/work being protected legally.

What is music licensing? Music licensing is the licensed used for copyrighted music. This allows the owner of the music to maintain the copyright of their original work. It also ensures the owner of the musical work to be compensated if their music is being used by others. The music licensing companies has limited rights to use the work without separate agreements. In music licensing, you could get your work licensed in the form of music, composition and songwriting.

During the music licensing process, there are terms that would be discussed by the groups involved. If you are an independent musician, you would be the licensor. You are the one responsible of the music created, thus you are the copyright owner of the licensed work. A licensee would be the music licensing company as they would be the one who will distribute your work to other industries. They will also collect the royalty fees as distribute them back to you if your music is included in live performances, TV shows, ads, campaigns, video games, etc.

There are also two kinds of contracts in music licensing, namely exclusive contract and non-exclusive contract. Exclusive contract means having your work licensed exclusively to a single music licensing company. Only a single company has the authority to distribute and market your work. If you signed an exclusive contract to your song or album, you cannot use the same music contents and get it signed by other music licensing companies. The agreement is exclusive and confidential to the licensor and the licensee.

Non-exclusive contract allows a second party to distribute your work and it doesn’t prohibit the licensor to sell their music to other music licensing companies or licensees. An independent musician can sign a non-exclusive contract to multiple companies using the same music content. Non-exclusive contracts are generally used to prevent an individual from being locked into a restrictive contract before their work gains popularity. This type of contract is designed to protect music artists from being taken advantage of in the early stages of their respective careers while on the process of getting their music out to larger audiences.

There are also cases which involves direct payment for used music content. This is called Sync Fees. Sync fee is a license granted by a holder of a copyrighted music to allow a licensee to synchronize music with visual media such as ads, films, TV shows, movie trailers, video games, etc. For example, a video producer is in dire need of music content for a certain project and is in a limited time of finding one.

In these cases, the artist and the music licensing company will be contacted directly for the possible use of the original work and negotiate the upfront payment involved. Sync fees can range from a few dollars to a couple of hundred dollars or up to thousands. The payment usually depends on how big and established a company is. If it is a well known company, there is a probability that the sync fee will spike up in value.

We need to understand that businesses nowadays are paying premium for music at an all time high. The influx and revenue generated on different industries are worth billions of dollars and the music artists who got their music licensed will get a big share of that money. The content of music is very important. Every single company need visual and audio content. You can’t do ads, shows and movies without having any music content.

Music licensing brings compensation for assets used. This is called royalty fees. A royalty fee is the payment collected by one party from another for the ongoing use of a copyrighted asset. You can get compensated if your work is featured on live public performances. For every live use of your music, you get compensated as you own the copyright of your work.

The American Society of Composers, Authors and Publishers (ASCAP) has collected over $941 million dollars in licensing fees and distributed $827.7 million dollars in royalties to its members back in 2014. BMI on the other hand, collected more than $1.013 billion dollars in license fees and distributed over $877 million dollars in royalties to its members during the year 2015.

Music licensing is the modern way of earning through music. In the past few years, the physical sales had gone down. Streaming music has taken over because it’s more convenient and practical with the help of the World Wide Web. With the rise of streaming sales, the figures that could be collected as royalty fees could spike up in the years coming. In fact, as stated in an Australian financial review website, streaming generated $2.5 billion dollars in US music sales last year, overtaking digital downloads as the industry’s biggest source of music revenue. As stated in the picture below, the global streaming of music is projected to reach greater heights in terms of revenue in the upcoming years.

The internet contributed greatly for the rise of music licensing and streaming. 20 years ago, the distribution of music hasn’t been exactly this big. Television shows and filmmakers are the top two industries that need music content. Today, there are more and more TV shows, films, commercials, movies, ads and tons of video games that need music content. It is safe to say that the internet opened the public eye about the opportunities involved behind it.

One of the most visited sites on earth is YouTube. People use, duplicate, rework, copy, revise and perform music from different artists around the world. It also has an influx of ads which contains music content. To track all these data, YouTube has a Content ID System. If your music is licensed, you can contact this site and they will take a look at their data and see if your work is being used by other parties. As the licensor, you have the authority to take actions such as mute the audio which matches your music, block a whole video from being viewed, track the video’s viewership statistics or monetize the video by running ads against it. Every country has different rules about it. But YouTube runs a lot of ads and monetizing work from this site is very probable.

If you are an independent musician, you must improve and instill professionalism in your craft to get your chances up of being signed by a music licensing company. With billions of dollars of revenue involved today, you want at least a slice of the pie. Monetizing your passion is never easy but taking the necessary steps to make it work is a must to reach success.