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									Music Licensing
  Donald R. Simon, Esq.
           Adjunct Professor
 Radio Dept. - Columbia College Chicago
              J-Term, 2009
Music Licensing - Session 3
• “Clearing” a song
• Performing rights
  societies
• Mechanical, master use,
  and synchronization
  licenses
• Selecting a music
  publisher
• Types of publishing deals
• Setting up a music
  publishing company
         Music Licensing
• 2 CRs involved:
  – Recall that CR owners are afforded virtual
    monopolies:
    1. To reproduce the work in copies or phonorecords;
    2. To prepare derivative works;
    3. To distribute copies or phonorecords;
    4. To perform the work publicly;
    5. To display the work publicly; and
    6. To perform sound recordings by digital audio
       transmission.
                     Music Licensing
•Publisher grants right to
license performance right to    Juke              Radio or          Restaurants,      Songwriter
a performing rights society.    Box                 TV               Bars, and
(“PRS”)                        Owners             Station           Background




                                                                                                      Assignment
                                                                                        Royalties
                                                                       Music
•Anyone wishing to perform




                                                        Blanket
a song publicly must get a      JLO
license from a PRS or




                                      Blanket
directly from a publisher.

•The PRSs handle the                                                                  SIDE A
royalty distribution for all                    ASCAP
public performance licenses                      BMI
                                                                                     Publisher
                                                SESAC               Performance
•PRSs issue blanket licenses
to radio and TV stations,                                                          Record Company
bars, restaurants, etc. that
perform their members’
songs.
                                                                                       SIDE B
•Radio/TV stations pay a




                                                                                         Assignment
percentage of their




                                                                                                      Royalties
revenues; businesses have                           Revenue Stream
set rates depending on                              Transfer of Legal Right
various factors.

•PRSs have complex
tracking and distribution                                                              Recording
formulas.                                                                                Artist
        Music Licensing
• 2 CRs involved:
  – Obtaining permission to use music may
    involve 2 CRs.
    • Musical composition: (notes and lyrics) typically
      owned by the songwriter or by a music publishing
      company; and
    • Sound recording: typically owned by a recording
      company (or the artist themselves if unsigned).

    • Each CR MUST be properly licensed.
         Music Licensing
• Obtaining Permission:
  – You have to obtain rights at least from the
    publisher, and possibly from the label (if
    planning to use a specific recording).
  – Typical licensing scenarios:
    • A radio station that plays songs.
    • A restaurant or club that plays songs.

    • A commercial, film, TV program, or video game.
    • A toy that plays a song.
         Music Licensing
• Performance Rights Licensing:
  – Right to play (or perform) music that the
    public will hear in one way or another.
  – Difficult for radio and TV stations,
    restaurants, and clubs playing 100s of songs
    a day to get rights from owners.
  – Difficult to grant rights to all radio and TV
    stations, clubs, and restaurants.
  – ASCAP, BMI, SESAC, and others.
        Music Licensing
• Performance Rights Licensing:
  – Performing Rights Societies (“PRS”) grant
    blanket licenses to radio and TV stations,
    restaurants, and clubs to play any song from
    their repertoire.
  – Collect and distribute royalties to
    songwriters and publishing companies.
  – Engage in “sting” operations to catch
    unlicensed establishments. Fines can be
    steep.
        Music Licensing
• Performance Rights Licensing:
  – Fairness In Music Licensing Act of 1998.
  – Was a compromise in exchange for passing
    the Sonny Bono Term Extension Act.
  – Stores smaller than 2K sq.ft. and restaurants
    and bars smaller then 3,750 sq.ft. are not
    required to obtain a performance license.
        Music Licensing
• Performance Rights Licensing:
  – Radio (terrestrial) and TV stations,
    restaurants, and clubs do not need a
    performance license for the recordings.
  – Except for Internet uses, no monopoly right
    of performance for sound recordings.

                      Musical Work




            Composition         Recording
            (Notes/Lyrics)
        Music Licensing
• Performance Rights Licensing:
  – Sample Skating Rink BMI License.
  – If a rink has 15,000 sq.ft. of skating area
    and charges customers $5.00 to skate, what
    will be the performance license fee?
  – The rink owner will need to do the same
    thing for ASCAP.
        Music Licensing
• Film and TV Program Licensing:
  – You need a synchronization license from
    the publisher for the composition and a
    master use license from the label for the
    sound recording (unless you are re-recording
    the performance).


                      Musical Work




            Composition         Recording
            (Notes/Lyrics)
         Music Licensing
• Film and TV Program Licensing:
  – Synchronization Licenses:
    • Good only for theatrical distribution and
      broadcasting.
    • Distribution of copies on videocassette, DVD, and
      the like for home use, requires an additional
      license call a videogram license.
    • Derived from the CR owner’s monopoly right of
      reproduction.
        Music Licensing
• Film and TV Program Licensing:
  – Synchronization Licenses:
    • Fees for non-exclusive, perpetual use in a major
      motion picture can range from $150K or more for
      opening credits to $15K or less for background
      music.
    • Fees for non-exclusive, perpetual use in a TV
      program can range from a few $Ks to 10s of $Ks.
    • Fees for a 1-year national ad campaign typically
      range from $150K to $300K, or more depending on
      the popularity of the song.
        Music Licensing
• Film and TV Program Licensing:
  – Synchronization Licenses:
    • Sample Synchronization Agreement.
    • Must get from the publisher or the songwriter.
    • As of June 2002, Harry Fox Agency (“HFA”) no
      longer handles synchronization licenses.
        Music Licensing
• Reproduction Licensing:
  – You need a mechanical license from the
    publisher for the composition and a master
    use license from the label for the sound
    recording (unless you are re-recording the
    performance).


                      Musical Work




            Composition         Recording
            (Notes/Lyrics)
         Music Licensing
• Reproduction Licensing:
  – Mechanical Licenses:
    • Allows l’ee to record a composition on a record,
      tape, or CD.

    • Compulsory license only applies to copies that are
      intended for distribution to the public for private
      use.
    • A “compulsory” mechanical license is available to
      record and distribute a composition in the U.S.
      upon the payment of licensing fees at the statutory
      “compulsory” rate as set by §115 of the CR Act.
        Music Licensing
• Reproduction Licensing:
  – Mechanical License Fees (as of 1/1/06):
    • $.091 for recordings of a song 5 mins. or less; and
    • $.0175 per minute or fraction thereof for those
      over 5 minutes. For example:
       – 5:01 to 6:00 = $.105 (6 mins. x $.0175 =
         $.105)

       – 6:01 to 7:00 = $.1225 (7 mins. x $.0175 =
         $.1225)

       – 7:01 to 8:00 = $.14 (8 mins. x $.0175 = $.14)
        Music Licensing
• Reproduction Licensing:
  – Mechanical Licenses:
    • Sample Mechanical Licenses.
    • Licenses also available through HFA.
    • HFA Mechanical License Request form.
           Music Licensing
•   “Clearing” a Song:
    –   You want to use “I’m A Believer” written by
        Neil Diamond and performed by Smash
        Mouth in an upcoming film.
           Music Licensing
•   “Clearing” a Song:
    1. You need to find out if the sync and master
       use licenses are available for the song.
      •   The CD, album, cassette, or packaging lists a PRS
          (ASCAP, BMI, or SESAC) for the song.
      •   Search their databases to find the publisher.
      •   These PRSs do not control these rights, but they
          can tell you who does.
           Music Licensing
•   “Clearing” a Song:
    2. Call the publisher and ask to speak with
       someone in Rights, Permissions, or Licensing.
      •   Write down that person’s name and ask whether
          they control the sync rights for the song and if they
          are available.
      •   If so, you are officially negotiating!
      •   Since there are no set fees as with mechanical
          licenses, there may be room to negotiate.
           Music Licensing
•   “Clearing” a Song:
    3. Explain to the publisher’s rep your intended
       use of the song.
      •   Opening credits, closing credits, or background,
          length of time, etc.
      •   Whether or not you’re an indie producer.
      •   Be ready to tell the publisher’s rep your music
          budget and offer to send them a dub of the film.
      •   Ask how much the publisher wants for the sync
          license. Then make a counter-offer!
           Music Licensing
•   “Clearing” a Song:
    3. Explain to the publisher’s rep your intended
       use of the song.
      •   Keep it friendly.
      •   Be prepared to walk away.
      •   They may call you back later and accept your offer.
      •   Repeat this process for every recording you need to
          clear.
           Music Licensing
•   “Clearing” a Song:
    4. Call the company that controls the Master
       Use rights.
      •   Usually will be a recording company.
      •   Can be quite expensive, especially if the recording
          artist is famous.
      •   They argue that the artist is more famous and
          recognizable than the song--they might be right!
      •   Why you may hear hit songs re-recorded by
          someone obscure. Be careful of soundalikes!
           Music Licensing
•   “Clearing” a Song:
    4. Call the company that controls the Master
       Use rights.
      •   If the label isn’t budging, use any pull you might
          have with the band, artist, even producer.
      •   Be prepared to walk away.
      •   Repeat this process for every recording you need to
          clear.
Music Publishing: Overview
•   Broader concept than licensing.
•   Frees up songwriters up to write songs.
•   Publishing involves:
     1. Promoting and licensing the performance and
        publication of musical compositions;
     2. Collecting income arising from such promotion and
        licensing;
     3. Paying songwriters their share of the collected
        income (typically 50% of collected sums);
     4. Acquisition of musical compositions; and
     5. Administering legal protection of the composition.
Music Publishing: Overview
1. Songwriter composes          Songwriter

   song.

2. Assigns the song               Song

   over to a publishing
   company.
                                Publisher
3. Publisher licenses
   song and keeps 50%
   of the proceeds.   Records     Print      TV/Films
Music Publishing: Overview
•   Sources of publishing income:
    –   Major:
        •   sound recordings, digital download (iTunes, etc.),
            public performances, motion pictures,
            videocassettes and DVDs, TV programs, and
            advertising.

    –   Secondary:
        •   printed music, radio programs, music boxes, and
            dramatic performances.

    –   Emerging:
        •   Computer games/software, sampling, and
            ringtones.
Music Publishing: Overview
• The Publishing Deal:
 –   Income is shared between the songwriter(s)
     and their publishing company.
     •   Songwriter(s) gets the writer’s share; and
     •   Publisher gets the publisher’s share.
     •   %s of each of the above are open to negotiation
         depending on the bargaining power of each side.

 –   Defined and governed by the “Songwriter
     Agreement.”
 –   Sample Songwriter agreements.
Music Publishing: Overview
• The Publishing Deal:
 –   Considerations used in selecting a publisher
     and the publishing arrangement vary widely.
     •   A new songwriter looking to break into the biz will
         have fewer options than an established artist.
     •   New songwriter will likely seek a publisher willing to
         commit sufficient time to promote their songs in
         hopes of launching their career.
     •   Established artist, with sufficient resources to
         promote their music, may seek a larger share of
         the publishing income and lower transaction cost.
Music Publishing: Overview
• The Publishing Deal:
 –   Exclusive Term Agreement:
     •   Songwriter can be essentially a “staff writer.”
     •   All songs written become the publisher’s property.

 –   Co-Publishing Agreement:
     •   Songwriter keeps the writer’s share and a portion
         of the publisher’s share (up to 50%), too!
     •   Songwriter and publisher share CR ownership.

 –   Administration Agreement:
     •   Songwriter retains both shares.
     •   Songwriter retains full CR ownership.
     •   Publisher charges 10-25% fee, plus expenses.
Music Publishing: Overview
• Starting A Publishing Company:
 –   Reasons to start a publishing company:
     •   You are a songwriter and have the resources to
         promote your own songs instead of depending on
         an outside publisher.
     •   You are a record label and want to keep the
         publishing of your artists “in-house.”
     •   You want to start a business that exploits
         songwriting talent various reasons (recording,
         placement, etc.).
Music Publishing: Overview
• Starting A Publishing Company:
  1. Affiliate your company with ASCAP or BMI.
   •   These societies won’t permit use of a name that’s
       the same or similar to an existing company.
   •   Give the society three choices, ranked in order.
   •   If you’re also a songwriter, affiliate as a writer with
       that same society, too.
   •   If you are going to publish other people’s songs, as
       opposed to only your own, you need to have 2
       companies, one for ASCAP and one for BMI.
Music Publishing: Overview
• Starting A Publishing Company:
  1. Affiliate your company with ASCAP or BMI.
   •   Can take about 5 weeks to get approval.
   •   The more common your company name choice, the
       lower the chance of getting approval.
   •   Societies have offices in NY, LA, and Nashville.
       ASCAP has a Chicago office.
Music Publishing: Overview
• Starting A Publishing Company:
  2. Corporate formalities.
   •   May incorporate (“Inc.”) or form an LLC.
   •   Fill-out appropriate incorporation forms and pay
       required filing fees with the secretary of state.
   •   If you choose not to incorporate and are doing
       business in something other than your legal name,
       you must file a “fictitious name” or D/B/A
       paperwork with the county.
   •   Get a tax ID number and open a checking account.
Music Publishing: Overview
• Starting A Publishing Company:
  3. CR Registration.
   •   Register all of the songs that you will be publishing
       in the publishing company’s name.
   •   If the songs were previously registered in your
       name, or in some other songwriters name, you will
       need to file an assignment transferring them to the
       publisher’s name.
   •   $$$! $45 for each CR application!
Music Publishing: Overview
• Starting A Publishing Company:
  4. Society Registration.
   •   Register all of the songs that you will be publishing
       with your chosen society.

  5. Database of agreements.
   •   Draft or acquire various form agreements to sign
       artists and do business.
   •   Purchase form books and/or use the services of an
       attorney with knowledge and experience in this
       area.
Music Licensing - Session 4
• Digital public
  performance and new
  media licensing

• Licensing for
  podcasting

• Internet Radio
  Equality Act

• Sampling

• Guest speaker

								
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