Licensing Music for Films, TV, Commercials and Computer Games

Whenever a producer of a film, television show, commercial, or computer game wants to use music in a project, there are two different kinds of licenses which normally come into play: (1) a “Synchronization License” and (2) a “Master Use License.”

The Synchronization License.  The producer of a film, television show, commercial, or computer game must always obtain the written permission of the owner of the underlying song, which as a general rule is the songwriter or the songwriter’s own music publishing company, assuming that the songwriter does not have a publishing deal with an outside music publisher.  However, if there is a publishing deal in place covering the song at issue, then the owner of the song is normally the music publisher. This permission which must be obtained for the underlying song is called a “synchronization license.” Here we are not talking about a particular recorded version of a song, but instead, only the underlying song itself.

The terminology here can get confusing. But, to make it simpler, let’s take a situation in which a song has been written by a songwriter named Joe A, and the music publisher for the song is B Music Company.  Let’s also say that three different bands have each recorded their own separate versions of the song, and let’s call those bands X, Y, and Z. In this situation, the synchronization license is obtained from the B Music Company, regardless of which recorded version (i.e., X, Y or Z’s) will be used.

As for the permission which needs to be obtained for the specific recorded version which the producer of a film, television show, commercial, or computer game wants to use, that’s called a “master use license.”

The Master Use License. A master use license needs to be obtained by the producer for whichever recorded version is going to be used.  So, if the producer of a film, television show, commercial, or computer game wants to use Band A’s version, then the producer must obtain a master use license from the band (if the band is unsigned), or, if the band is signed, then from the band’s label.  (Bear in mind, though, that even when a band is signed, the band’s recording contract may very well contain provisions requiring the label to obtain the band’s approval before allowing the band’s music to be used in a film, television show, commercial, or computer game. Also, there are certain union and guild rules that are applicable and that in some instances require the artist’s consent, even when the label owns the masters.)

The comments above, concerning the producer’s obligation to obtain a master use license, assume that the producer wants to use an already existing recorded version of a song.  However, there are situations in which the producer may want to have a new recording made, i.e., as a newly-recorded “work for hire.” Sometimes, this happens because the producer cannot obtain the necessary band and/or label approvals (as can be seen, for example, in some recent commercials using Beatles songs), and sometimes it’s because the already existing recorded version does not stylistically fit the project for one reason or another.

In this situation – i.e., when a producer is having a new version recorded as a “work for hire” — the producer does not need to obtain a master use license, since the producer is not going to be using a master recording owned by someone else. But, even then, the producer still needs to obtain a synchronization license from the music publisher of the underlying song.

COMMON “SYNCHRONIZATION LICENSING” ISSUES

There are many issues which may arise whenever a synchronization license is being negotiated between a producer of a film, television show, commercial, or computer game, and the publisher which owns the underlying composition.

Some of the main issues are: (1) The length of “the term” of the license (i.e., how long the license will be remain in effect for); (2) The scope of the territory (i.e., the geographical area in which the producer can use the song in his or her production); and (3) Whether the producer will have exclusive rights to use the song, or instead, whether the publisher can give other producers the right to use the same song at the same time.

The Term

1.  Theatrical Films: The term is generally for the “life of the copyright” (in other words, the license will last as long as the song is protected by copyright law, which, as a general rule of thumb, is today 95 years).

2.  Television: Sometimes for 2, 3, 5, or 7 years, or, currently much more common, for the “life of copyright.”  (There’s been a rapid trend toward “life of copyright” in recent years.)

3.  Commercials: Typically an initial term of anywhere from 13 weeks to one year, often with the producer’s right to renew for another equal term upon payment of an additional licensing fee (which might, for example, be 125% or more of the original fee).

4.   Computer Games: The term is generally for the “life of the copyright,” or for a 2,3, or 5 year term.  As a practical matter, there are very few computer games which will have a life span of over a year or two, and so in most instances the producer won’t consider it all that important to obtain a long term license.

The Territory

1.  Theatrical Films: Typically the territory is “worldwide.”

2. Television:  It used to be that the territory was usually limited to certain countries.  Today, most often, “worldwide.”

3. Commercials: Local, regional, national, certain countries, or worldwide, i.e., depending on what the parties negotiate.

4.  Computer Games: Worldwide.

It’s important to mention here, though, that even though a license may say that it’s a worldwide license, a producer has to be very careful here, especially if it is a large company doing business in other countries. This is because of the fact that in many foreign countries, licenses issued directly by publishers are not valid for those countries. Instead, a producer seeking to clear the rights for those countries must obtain a license from a rights organization or governmental agency in each of those countries, even if the producer has already obtained a purportedly “worldwide” license from the U.S. publisher.

Exclusivity Versus Non-Exclusivity

1. For theatrical films and television shows: Synchronization licenses are almost always non-exclusive in regards to films and television shows.  If there is exclusivity, the producer will usually be paying dearly for it.  Assuming there is no exclusivity, the owner of the song can license it to as many other companies as it likes.

2.  For commercials: There may be exclusivity for a limited period of time.  When there is exclusivity, it is most often limited exclusivity, limited either to the territory of the license and/or to particular products or industries.

3. For computer games: Usually non-exclusive, though sometimes the license agreement will prohibit the music publisher from licensing the music to be used in other computer games for however long the license agreement will be in effect.

The Amount of the Synchronization License Fee

How big the synchronization fee will be in any given situation will depend on many factors, such as the degree of public recognition of the particular music involved (for example, whether it was a hit song in the past, and if so, how recently), the nature of usage (e.g., in a film versus a television show versus a commercial, etc.), and the term of the license.  Depending on the nature of the production (film versus television, etc), there will be other considerations as well.  For example, in the case of a film, there are such considerations as how many times the song will be used in the film (and for how long each time), and whether the music will be used in the foreground (versus the background), or in trailers.

Even when the up-front synchronization license fee is small, there can still be some very substantial public performance monies to be eventually received by the publisher and composer from their performance rights society (i.e., ASCAP, BMI, or SESAC), as discussed in more detail below.

Often the license agreement will contain a “most favored nations” (aka “MFN”) clause, which says that if multiple songs are used in a film, computer game, etc., then if the producer pays another publisher a higher fee than you (as a publisher) have negotiated, then you will get the same (higher) amount that the other publisher has negotiated for.

“MASTER USE” LICENSING ISSUES

Many of the issues mentioned above in regards to synchronization licenses are also issues in negotiations over master use licenses.

As for the amount of the licensing fee to be paid in any given situation, the amount of the master use fee to be charged by the record company is often very similar in amount to, or identical to, the synchronization fee charged by the publisher in that same situation.

In some instances, however, the record company negotiating the terms of a master use license may be more anxious (than the music publisher who is negotiating the synchronization license) to have the music used, in order to promote an artist who currently has a record out.  And so, the record company may be willing to agree to a lower fee than the publisher is willing to accept.  On the other hand, I have seen instances in which the record company has required a higher fee than the publisher has.

Also, sometimes there is a large difference in the fees charged by a publisher and record company because of the fact that there is a small publisher or record company involved which is not very experienced in the licensing area, and which as a result has unknowingly (and unnecessarily) quoted too low of a fee to the producer.

ADDITIONAL INCOME FROM ASCAP/BMI/SESAC
FOR PUBLISHERS AND SONGWRITERS

When music is “publicly performed” — as in, for example, the case of music which is broadcast as part of a television show, or publicly performed online (for example, in an online computer game)– the publisher of the underlying song and the songwriter will be earning not only the synchronization fee which they received from the producer, but also “public performance” income from the publisher’s and composer’s performance rights society (i.e., ASCAP, BMI, or SESAC).  This “public performance” income can be very substantial.

Sometimes, however, the public performance income can be very small–for example, when  music is used in a cable show.  This is because of the low rates that have been negotiated between ASCAP and BMI, on the one hand, and cable networks on the other hand.  The fact that these rates are so low has become a controversial issue among many members of ASCAP and BMI, particularly given the fact that many of the cable networks have become lucratively profitable for their owners.

In any event, there are still many situations in which public performance income can be quite substantial, and in those situations, the publisher is often willing to accept a synchronization license fee significantly lower than it would otherwise be inclined to accept, rather than potentially losing the deal (thereby losing not only the synchronization license fee paid by the producer, but also the “public performance” income earned from ASCAP, BMI or SESAC by reason of the broadcasts of the television show).  This is particularly true in certain instances, such as when a song is being used as the title song for a TV show, or when music is being used in infomercials which are being broadcast over and over for long periods of time, which can generate large amounts of “public performance” income.

Bear in mind here that we are only talking about the public performance income payable to the publishers and songwriters of the underlying song.  The same considerations do not apply to the owner of the master recording of a particular recorded version of the song –i.e., a band or its label. 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 in the United States (except for certain Internet uses).  The situation is different in many foreign countries, where labels can earn substantial sums from the “public performances” of their master recordings in those foreign countries.

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 it receives from the producer, since it will not be receiving any public performance income from ASCAP, BMI or SESAC.  As a result, the owner of the master recording may feel more of a need (than the publisher) to negotiate to receive the highest possible up-front fee from the producer.

 

Editors Note: The reader is cautioned to seek the advice of the reader’s own attorney concerning the applicability of the general principles discussed above to the reader’s own activities.

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