A Brief Introduction About the Music License Agreement
A music license agreement is entered into by a music production company and the owner of the copyright. Without such an agreement, you will lose out on royalty as a singer and unfairly gain as a recording company. Licensing music will be beneficial for both the recording company and the musician. The artist will be paid the royalty due in the manner he or she wants it. It could be as a percentage of the total revenue, a fixed amount every time the music is used, or a combination of both.
When licensing music for commercial use, the agreement will clearly state where the song can be used and the duration. It will also state the geographical area where the music can be used. There will be a clause, if agreed, regarding the transfer of rights by the buyer. Specific mention will be made regarding the duplication of the music.
Who Takes the Music License Agreement? – People Involved
These agreements are entered into by artists who own the rights to the property like music, songs, and so on, which would be used by a different party on a commercial basis. Production companies who wish to acquire the rights to such property would also need to enter into such agreements.
Purpose of the Music License – Why Do You Need It?
The purpose of such agreements is to ensure that the rights of both the artist and the music production company are protected. As an artist who has composed a tune that is in demand, you need to ensure that your hard work and ingenuity are adequately rewarded. As far as a music production company is concerned, finding that song that they are looking for means higher profits.
Both the artist and the music production will stand to gain if there an agreement. The artist can demand royalty according to the popularity of his or her tune and could decide the mode of payment with the music production company. This would mean regular income for the artist throughout his or her entire life.
The music production company will have a significant share of the profits, which would be a sizeable amount depending on the popularity of the tune. They would have the right to use the music by the terms laid down in the agreement. Without the agreement, the artist would not be able to charge anything for his or her work. The music production companies would profit from the tune and not pay anything to the creator of the tune.
Contents of the Music License Agreement – Inclusions
The content of the music license agreement is significant because it will ensure that, as an artist, you get the best deal from the music production company. The production company also gains when they can maximize their profits by strategically using the tune.
A comprehensive agreement should contain the following information:
- Parties to the agreement: The names of the parties to the agreement, the artist and the music production company
- Registration details: The registration details of the music production company as well as the registered office address
- Copyright information: The copyright details of the tune being licensed including the rights for using that tune
- Purpose of licensing: The song could be licensed for a single purpose or multiple purposes. The more rights that are involved, the higher the value of the agreement. In a single purpose agreement, a film producer can use the song for the film and not any other purpose
- Exclusivity: This will determine what rights the musician will retain. If the parties to the agreement want, then the song can be used for purposes beyond the licensing agreement. The greater the exclusivity, the higher the licensing agreement will be worth
- Agreement duration: The duration of the agreement could be time-based or any other criteria mutually decided by both parties
- Geographical area: The agreement could be location-specific in which case the song can be used correctly for that location
- Royalties: The percentage of profits payable by the music production company as royalties to the artist.
How to Draft the Music License Agreement?
Points to Consider While Preparing the Agreement
You can refer to this agreement template for drafting this agreement.
While drafting an agreement, the following points need to be considered:
- Parties involved: The parties involved in the agreement and the relationship between them
- Effective date from which the contract is operational
- Details about the song or tune being licensed: The information should include the copyright information related to the song and the validity of the copyright
- Mode of royalty payment: You need to determine whether the royalty will be based on a percentage of profits or will it be a flat rate
- Information relating to the music production company: The registration details of the company and the registered office address
- Modification of the song: The musician may or may not grant the right to the music production company to modify the song, either by remixing it or clipping the song
- Assignment: This clause would determine whether the musician would be permitted to sell the license. The music producer could also be granted the right to use the same song for another film
- Governing law: The laws of the state related to licensing of music should be strictly followed while drafting the agreement
- Amendments: The agreement can be amended by mutual agreement if required
Negotiation Strategy
Before entering into this agreement, the parties to the agreement must determine the value derived and accordingly settle on a reasonable fee. The musician must negotiate a royalty that would be commensurate with the future earnings expected from the tune or song. The music production company should verify the popularity of the singer and negotiate a fair price.
[ Also Read: Music Contracts ]
Benefits & Drawbacks of the Music License Agreement
The benefits of having a music license are as under:
- Protection of interest: The interests of both parties to the agreement are protected. The artist is assured of payment of the agreed royalty, and the music production company can use the music for commercial purposes.
- Specific use: The artist can specify that the song can be used for a particular film when licensing music for a film. A certain geographical area could be mentioned in the agreement for using the song
- Multiple rights: The artist can charge for multiple and varied rights for the same song or tune and earn more
- Amending or modifying the song: The artist could specify that the song may or may not be modified. The music production company has to abide by the option mentioned in the agreement
The drawbacks of having music license are as under:
- The artist has control over the usage of the song during the tenure of the agreement. Even if there are more profitable opportunities for the music production company, they have to adhere to the rules of the agreement
- The music production company may revise the agreement or terminate it if the minimum sales generated are below the figure mentioned in the agreement.
What Happens in Case of Violation?
In case of such agreements, the artist has the copyright to the song or tune, and the music producer who intends to use the song will need to pay a royalty to use the song for commercial reasons. The artist agrees so that he or she gets a fair share of the profits earned by the production company. The music production company is part of such an agreement so that they can use the tune and benefit from the popularity of the singer.
The artist is paid a royalty based on the popularity of the tune. If the music production company does not pay the agreed royalty to the artist, it amounts to a violation of the agreement and the company has to pay the artist the fee, a penalty as well as the legal costs incurred to realize the dues.
If the artist sells the rights exclusively to a music production company and then allows another production company to use the song for the same purpose, this is a violation of the agreement, and the music production company can take the artist to court. The artist will have to pay the penalty according to the state where the agreement is drafted along with legal costs for filing the claim(1).
If you are a creator of a particular tune or song which you want to profit from or a music production company that requires a particular tune to increase revenues substantially, a music license agreement is mandatory. The artist has to estimate the popularity of the song or tune to determine what he or she would charge the music production company. The music production company would have to assess whether the royalty demanded by the artist is justified or not.
If both parties are in agreement regarding the royalty and the use of the song or tune, they should enter into an official contract where the music company pays an absolute royalty to the artist for a specific use of the tune. If both parties to the agreement to adhere to the terms and conditions given therein, then it is a win-win situation for both. The company will enjoy higher revenues, and the artist will have a steady flow of income in terms of royalties.