Music Licensing Chapter Seven

A film producer wishes to use a published piece of music. Start Thinking . . . A film producer wishes to use a published piece of music. How does he go about obtaining the license to do so? With whom does he negotiate? What kind of licenses are required? How does the money he pays end up in the hands of the copyright holder? Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Chapter Goals Learn that licensing is the process through which copyright ownership is controlled and made profitable. Discover how licensing organizations function to collect and disburse royalties paid for music performances. Examine the similarities and differences among ASCAP, BMI, and SESAC. Gain awareness of the different kinds of music use licenses, particularly mechanical and synchronization licenses. Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Music Rights: An Overview Protected music can only be used after permission (license) granted Path of creation of copyright to collection of cash = heartbeat of music business Most common licenses Performance license Synchronization license Mechanical license Master use license Compulsory license Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Music Rights: An Overview [Insert Table 7.1] Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Performing Rights Organizations Largest source of income for many composers and publishers = licensed public performances U.S. nonsongwriter artists historically not received performance royalties PROs issue licenses collect and distribute royalties issue blanket performance licenses (vs. source licenses) collect more than $2 billion annually Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Keeping Track of the Music PROs monitor marketplace data Royalty distribution determined by number and kind of performances Foreign collections Berne Convention Foreign subpublisher Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Membership Options Songwriters can affiliate with only one traditional PRO American Society of Composers, Authors and Publishers (ASCAP) oldest PRO for songwriters large income from multiple licensees big membership Broadcast Music Inc. (BMI) Launched as a counterweight to ASCAP Historically promoted hot new genres (rock) About the same revenue as ASCAP Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Membership Options SESAC SoundExchange For-profit company with smaller, select songwriter base Expanding its reach (e.g., acquiring The Harry Fox Agency) SoundExchange Unique PRO representing labels and performers—not songwriters Very fast-growing revenue from digital transmission Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Mechanical Licenses For recordings distributed commercially only for private use Negotiated mechanical license differs from statutory compulsory license royalty rate may be lower quarterly royalty accountings “notice of intent” waived The Harry Fox Agency, Inc. Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Synchronization Licenses Music timed to synchronize with action on the screen Movie rights Synchronization license fees vary European considerations TV program rights New use rights Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Cable Television Licenses Blanket licenses Compulsory license from Copyright Office Other cable TV network licenses Network agreements Satellite Home Viewer Act of 1988 Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Not addressed by 1976 Copyright Act Consensus: Video Licenses Not addressed by 1976 Copyright Act Consensus: All videos defined as audiovisual works Performance rights must be acquired by the party who shows videos to public Payment to publisher for right to reproduce videos Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Transcription Licenses Music used by syndicated programs, background music companies, in-flight entertainment, music library services Require mechanical license and performance license Negotiations with publisher or HFA Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Video (electronic) games Special Use Permits TV commercials often include the right to alter the words and music buy-out deal Video (electronic) games license negotiation based on many factors Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Performance licenses for nondramatic music JLO blanket license Jukebox Licenses Performance licenses for nondramatic music JLO blanket license covers the use of music from all three PROs JLO handles rebates and new jukebox registrations Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Dramatic Music Rights Compositions used in the context of a wider piece or in the telling of a larger story Grand rights and small rights ASCAP, BMI, SESAC handle small rights, but usually not grand rights. Broadway musical subsidiary rights Dramatic performances require license royalty payment rental of show’s book, score, and parts Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

Creative Commons Nonprofit corporation founded in 2001 to facilitate the distribution of copyrighted works The typical CC license gives “baseline rights” to worldwide distribution does not allow changes is free of charge requires copyright holder consent for use Most publishers do not allow CC licensing Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners

For Further Thought . . . What are the implications of smartphones and other digital devices on synch licenses? Discuss the various licenses that may be required for music in film. Compare BMI, ASCAP, and SESAC in respect to their ownership and not-for-profit status. What are the advantages and disadvantages of joining either ASCAP or BMI? Music Business Handbook and Career Guide, 11th Ed. © 2013 Sherwood Publishing Partners