The following is from our ongoing series, ‘The 11 Contracts Every Artist, Songwriter, and Producer Should Know,” by music industry attorney Steve Gordon. The series includes horrific contracts from hell that you should never, ever sign.
This, the third installment of the 11-part series on basic music industry agreements, focuses on the use of music in audiovisual works such as movies, television, TV commercials and video games. The Introduction, below, explains fundamental concepts, provides examples of the amounts of money you can expect to make, explains the role of Performing Rights Organizations (PROs) in collecting additional income on behalf of songwriters, discusses the key provisions in standard licenses and finally, briefly describes the role of publishers, sync reps, and other licensing agents.
This installment also provides comprehensive comments on the following three licenses. If you get a similar deal, you will know what to look out for, how to make the deal fairer, and, if the company that wants to use your music won’t negotiate, how to decide if it’s still worth it:
(1) MTV’s “Music Submission Form” – a terrible deal for any artist, songwriter or producer.
(2) A very favorable deal for a producer/songwriter involving music for a national commercial campaign.
(3) A fair, but not great, deal for a songwriter involving music in a made for TV movie.
Two Copyrights: “Sound Recordings and “Musical Works”
“Sync” licenses are agreements for the use of music in audiovisual projects. Used in its strictest sense, a sync license refers to the use of a musical composition in an audiovisual work. The term “master use” license is sometimes used to refer to the use of a music recording (sometimes referred to as a “master”) in an audiovisual work. Sync and master use licenses can make money for songwriters, and master use licenses can make money for recording artists. It is possible for a license to include both a grant of rights in a song and a master if the same person wrote the song and produced the master.
The copyright law protects “musical works” including songs and any accompanying words as well as orchestral works, librettos and other musical compositions. Copyright also protects “sound recordings,” that is, recordings of musical compositions. Indie artists/songwriters who record their own songs generally own the copyrights in their songs and masters. But once that artist/songwriter enters into a music publishing agreement, she generally transfers the copyright in her songs to the publisher, and the publisher pays her a royalty from the commercial exploitation of the songs including “syncs.” If the same artist/songwriter enters into a standard recording contract, any recording that she records during the term of the agreement is usually a “work for hire” for the record company. If that’s the case, as we explain below, the record company owns the copyright in the recordings, and pays royalties to the artist for both record sales and master use licenses.
However, in this installment of the series, we are going to look at sync and master use licenses from the point of view of songwriters and artists who have not entered into any exclusive publishing or recording agreements. Because an indie artist/songwriter does not have a publisher or label to negotiate sync and
master licenses for her, she should have her own lawyer, or at least have enough knowledge to avoid bad contracts. My goal in writing this installation, as with the series as a whole, is to alert indie artists, songwriters and producers of what to watch out for, what questions to ask, what they can do to make the contract they receive fairer, and when they should just walk away.
Indie Producers and Copyrights in Musical Compositions Contained in their Masters
For many years, producers generally did not create new music. They just recorded music created by songwriters and performed by artists. However, that has changed. Often in pop, R&B, and especially hip hop, producers do create new music by providing beats or even complete music floors over which an artist sings. In that case, the producer is creating two copyrights: 100% of the sound recording and a part of the musical composition.
Producers can and do sign publishing deals because the beats or instrumentals they create are musical compositions as well as sound recordings. In that case, the producer will generally have to transfer the copyright in any part of the musical composition that they contributed such as the beat.
Sync and Master Use Fees
Generally, but by no means always, the company that wishes to use an indie musician’s music for a movie, commercial, TV show or video game will offer an up-front, one-time payment generally called a “sync” fee (even if the songwriter is transferring rights in both the song and the master). The amount of the fee, if any, will depend on a variety of factors including:
The professional standing of the musician. For instance, if an ad agency regularly turns to certain producers to create music for a client’s ads, it probably will have worked out a standard fee with that producer.
The nature of audiovisual work for which the music is sought and whether the song was a hit. For instance, a major motion picture will usually pay from $10,000 to $25,000 for a song or master by an indie writer, artist or producer.
In contrast, a pop hit in major studio movie can easily fetch $100,000 or more. But an indie filmmaker may only be able to afford $5000 or less for any song or master. Don’t be surprised if they offer you no more than a credit.
At the beginning of your career a credit on the movie and in IMDB (an online database of information related to films, television programs, and video games, including cast, production crew such as music composers and musicians, biographies, plot summaries, trivia and reviews) could be valuable.
Some other factors are:
(a) In the case of a movie, as discussed above, the most important issue with regard to fees is whether the movie is a major big-budget studio production or an indie, but other factors include how many times the song is played in a movie and if it’s used over the beginning or end credits. Also, there is usually an additional fee if the music is used in a trailer.
(b) In the case of a TV spot, the biggest factor is whether the commercial is national (which may pay from several thousand to over $10,000 for an indie song or master) or will only play in one or several markets (which may pay less). But for a hit song, the fee could well be in the six figure range and even more for a hit by a superstar artist such as the Rolling Stones.
(c) In the case of a TV program, the most important factor is whether the program is network, or basic cable. Usually, but not always, network shows will pay better than shows on basic cable. The money for an indie songwriter or producer could range from no more than the royalty payable to the songwriter by his Performance Rights Organization (see below) to $2,500 to more than $10,000 depending on how much the production company or network wants the music.
(d) In the case of a video game producer by a major game maker, the synch fee could be a few thousand dollars. You can try to include a “most favored nations” ( “MFN”) clause, which states that, if the producer pays a higher fee for another song than you have negotiated, you will get the same (higher) amount.
If the master and the song are owned by different parties–for instance, if you wrote the song but your producer owns the track–a license will be needed with each of you.
Additional Income for Public Performance
When music is “publicly performed” — for example, when music is broadcast as part of a television show, or publicly performed online such as an online computer game), the songwriter may earn “public performance” income from the songwriter’s Performance Rights Organization or “”PRO” (i.e., ASCAP, BMI, SESAC, or the recently organized Global Music Rights or GMR). This income is in addition to the up-front sync fee, or it may be the only income that an indie songwriter receives.
Each PRO has rules that determine the amount of money that should be paid for a performance in an audiovisual work. The public performance income from a song in an audiovisual work can be substantial in some situations. For instance, if music is used in a national TV commercial which airs on network TV, the PRO royalty can exceed the sync fee. But the public performance income can be very small in other situations — for instance, when a small amount of a song is used in the background of a single scene in a basic cable program.
Where public performance income will be substantial, you may decide to accept a lower sync fee, rather than potentially losing the deal altogether. Note that we are only discussing the public performance income payable for the musical composition. The same considerations do not apply to the owner of the master recording -– i.e., an artist or a producer. Under U.S. copyright law, the owners of master recordings, unlike the owners of the underlying songs, are not entitled to public performance income for the broadcast of their recordings except via digital transmission such as Spotify, YouTube and Pandora, etc. If a commercial is intended to play on network TV, the commissioning company will generally try to get Internet rights for little or no additional compensation (see Media below).
SoundExchange, similar to the PROs for compositions, collects income for the public performance of music recordings but only for audio-only Internet Radio services such as Pandora. The situation is different in most foreign countries, where artists can earn performing rights royalties for the “public performances” of their master recordings on television as well as standard broadcast radio.
In short, the owner of the master recording’s only source of U.S. income from the master use license will be the up-front master use fee which she receives from the company for a TV commercial, movie, or TV show.
If the owner of the master is not the songwriter, he will not be receiving any public performance income from the PRO’s (or SoundExhange) so he may feel more of a need than the songwriter to negotiate the highest possible up-front fee.
Proper Registration of the Song with the PRO is Crucial
Each PRO has requirements that make writers responsible for properly registering their songs and for notifying them of any audiovisual projects that may generate performance income. I spent a year trying to get one PRO to pay for the theme song of a cable talk show because the writer did not provide a “cue sheet” before the broadcast of the series. A cue sheet is a schedule of the music contained in a film or television program or any other audiovisual work, and is the essential document for the PRO to distribute royalties for musical performances in audio-visual media. It is typically prepared by the production company, but the writer will not get paid unless the production company actually files it in a proper and timely manner.
(Here’s an example of a cue sheet)
Some licenses require a songwriter to yield all rights in a song to the company. In that case, the writer has no right to receive any PRO royalties. However, there are cases where the company requires the transfer of the copyright in the song, but allows the writer to receive the “writer’s share” of performance rights income (that is, 50% of the total amount payable by the PRO). In that case, the writer has to make sure the company is properly registering the song, providing cue sheets to the PRO, and complying with any other forms that have to be completed.
Work for Hire vs. Non-Exclusive License
An issue as important and in some cases more important than money is whether a license is “work for hire”. In a work for hire agreement, the songwriter, artist or producer loses all rights in her music, including the copyright and the right to use the music again for any purpose. If, on the other hand, the grant of rights to the company is a non-exclusive license, the creator keeps the copyright in her music, retains the right to distribute it as a record and make other deals. Here is a typical work for hire clause:
WORK FOR HIRE: Artist [Songwriter and/or Producer] agrees that all of the results and proceeds of his services shall be deemed a “work made for hire” for the Company under the U.S. Copyright. Accordingly, the Artist further acknowledges and agrees that Company is and shall be deemed to be the author and/or exclusive owner of all of the Recordings and Musical Compositions contained therein for all purposes and the exclusive owner throughout the world of all the rights of any kind comprised in the copyright(s) thereof and any renewal or extension rights in connection therewith, and of any and all other rights thereto, and that Company shall have the right to exploit any or all of the Recordings in any and all media, now known or hereafter devised, throughout the universe, in perpetuity, in all configurations as Record Company determines, including without limitation [name of movie, TV show, TV commercial etc.] In connection therewith Artist hereby grants to Company the right as attorney-in-fact to execute, acknowledge, deliver and record in the U.S. Copyright Office or elsewhere any and all such documents pertaining to the Recordings if he shall fail to execute same within five (5) days after so requested by Company.
It’s always better that the artist, songwriter and producer retain their copyrights. However, sometimes the work for hire clause will be non-negotiable, and then the creator has to ask herself: does the up-front money (and in the case of a songwriter who retains the writer’s share, the potential PRO royalties) compensate for the loss of the right to use the music?
Other Basic Contract Terms
Assuming the license is not “work for hire,” other important terms in sync and master use licenses are as follows:
Duration (or “Term”): The company will usually want the right to exploit the following durations of use:
1. Theatrical Films: Generally for the “life of the copyright.” In other words, the company’s right to use your music will last as long as the song is protected by copyright law: as long as you’re alive plus 70 years.
2. Television: Generally, the same as above.
3. Commercials: Typically an initial term of one year, often with the option for the company to renew for another equal term upon payment of an additional licensing fee (which is usually the same as the original term, although you can try to negotiate for a higher fee, for instance 125% of the original fee.)
4. Computer Games: Could be “life of the copyright,” or a briefer term such as 3 to 5 years. There are few games which will have a life span of more than a year or two, so in most instances the Company won’t consider it all that important to obtain a long term license.
Media: The company will want the right to exploit the audiovisual work as follows:
1. Theatrical Films: Generally, a movie producer, production company or studio will want the right to use a song or master in festivals for one year, with an option to exploit the movie, including your music, in all media (“broad rights”).
2. Television: Generally, the network or cable service will want all media rights because a TV show can be recycled in any number of platforms such as streaming, downloading, home video, etc. Talent should, however, try to negotiate a separate fee for home video including downloading.
3. Commercials: Typically limited to TV and Internet, but the songwriter/artist/producer can try to secure an additional fee use of the commercial on radio.
4. Computer Games: Generally all media now or hereinafter developed.
Territory: The Company will want the right to exploit the audiovisual work as follows:
1. Theatrical Films: Typically “worldwide.”
2. Television: The creator may be able to negotiate an additional fee for foreign use.
3. Commercials: Local, multiple U.S. markets, national or worldwide.
4. Computer Games: Worldwide.
The Role of Music Publishers and Labels
Once you enter into an exclusive recording and/or publisher deal, your label and publisher will negotiate sync and master use licenses on your behalf. The split is generally 50% payable to the label and 25% to 50% payable to the publisher after “recoupment” of any advances (including, in the case of a label, recording costs) that they paid you.
Reps and Licensing Agents
If you are familiar with the “sync business” you know that there are many companies, such as http://pumpaudio.com/, that may be willing to represent your music for sync placements. Some are more selective than others, and some are more pro-active in shopping your music than others. For instance, music libraries such as http://www.apmmusic.com/ have steady clients such as cable networks and ad agencies that continually scan the library’s collection for interstitial or background music. The reps’ fees vary from 65% in the case of Pump Audio all the way down to 20% or less if a rep really loves your music.
The biggest controversy in the sync licensing business is the exclusive vs. non-exclusive issue. The best argument to let a rep have exclusive rights is that they may be more motivated to shop your music. The best argument for non-exclusive is an exclusive rep may lose interest in your music and let it sit on a shelf for the duration of the agreement. The primary differences between a rep and a publisher are:
1. Reps rarely pay you an advance, but;
2. Rep deals are usually limited to the song or tracks you wish them to present. Standard publishing agreements cover any songs you create during the term of the agreement.
Three Sync Licenses: The Bad, the Good, and the Not Too Ugly
Re-printed below are three different sync licenses. The first is very pro-company. The second license is very pro-talent. The third is in between.
Each license covers a different situation. The first license, MTV’s Music Submission Form, is for use of music in any website, show or TV distributed by MTV or its parent company Viacom. The second is for use of new music in a single TV commercial. The third license is for the use of a relatively old song in a docudrama. In each case, the agreement was drafted by the network, agency and production company respectively.
(1) MTV Music Submission Form
(2) A Good Deal for Producer/Songwriter Involving Music for a National Commercial Campaign
(3) Fair, But Not Great, Sync Licensing Deal for Music In a Made-for-TV Movie
Steve Gordon gratefully acknowledges the assistance of Ryanne Perio in the preparation of this material. Ms. Perio is a graduate of Columbia Law School and a former legal intern at Atlantic Records and SAG-AFTRA. She is currently an associate at Wilmer, Cutler, Pickering, Hale & Dorr, where she focuses on intellectual property litigation.
Disclaimer: The information in this series has been prepared for informational purposes only and does not constitute legal advice. This series should be used as a guide to understanding the law, not as a substitute for the advice of qualified counsel. You should consult an attorney before making any significant legal decisions.
Image by Filippo C, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).
SAMPLE CONTRACTS HERE: http://www.digitalmusicnews.com/permalink/2015/05/25/a-simple-guide-to-signing-the-best-sync-deal-possible