Music License Contract – What is It & How To Use It?
Music licensing contracts are agreements between a copyright owner of a piece of music and an individual or organization wishing to use that music. These contracts enable copyright owners (typically composers or artists) to recover a return on their investment in a musical work. Agreements are typically organized into two categories, those between businesses or individuals and those between organizations and a licensee.
Musicians and music organizations dealing directly with a licensee are referred to as the "licensor," in that they are granting permission to the licensee to use the works of the licensor. The "licensee," is a business or individual seeking to gain access to the work . While such contracts begin with a licensor issuing an agreement, any agreement between a licensor and a licensee is considered a licensing contract because it establishes the relationship between the parties to an agreement made between them. There are many different kinds of licensing contracts, which are often titled according to the purpose of the license, be it a synchronization license, a performance license, or otherwise. Typically a licensing contract will specifically mention the specific purpose and scope of the use, which is the most critical factor in determining what licenses must be used. Once a licensing contract is issued, the licensee is granted a time period during which it can use the license.
Different Kinds of Music Licensing Contracts
There are a number of different types of music licensing agreements. Four of the most common are synchronization licenses, mechanical licenses, performance licenses, and master use licenses.
As mentioned above, Syncronization Licenses give the licensee the right to "synchronize" the licensor’s composition to a visual work. A film producer may license the rights to use a particular recording of a song in a film (in some cases that may be a public performance of the song as well).
Mechanical License gives the licensee the right to mechanically reproduce copies of a composition-i.e., turning a musical composition into a recording. For example, if an artist wanted to record a cover version of a popular song, they may obtain such a license.
A Performance License gives a music publisher or songwriter the right to perform their music in some capacity.
A Master Use License allows the licensee to use a specific recording of the composition. For example, a publishing company may grant a master use license to a record label. The master use license allows the record label to use the particular sound recording for the specified purpose in the agreement.
One aspect of these contracts is to describe with a certain amount of specificity, and yet with enough generality so as not to limit their rights unduly in the future, the types of things the licensee might want to do with the composition.
Common Elements of a Music Licensing Contract
The terms of any music licensing contract should be carefully scrutinized to ensure that everything that both parties have agreed to is legally binding. To facilitate this area, a "sample" of a music licensing contract has been drawn up to demonstrate the main areas of focus.
It is strongly recommended that all of the binder pages are signed in addition to the actual contract itself.
Every music licensing contract contains a clause that states exactly what rights have been given. As a sample, in section one of a music licensing contract, let’s look at the fact that rights have been granted to exploit the motion picture by the licensee in perpetuity and throughout the "universe" (this will be determined by the courts in case of a dispute). If there were any limitations such as medium (e.g., cinema only) or language, these should each be stated clearly, e.g., "in the English language only". The rights should also incorporate all means of distributing and exploiting the work, e.g., streaming, film festival distribution, and exploitation in all retail, home video and downloadable services.
The exclusion or limitation of rights in a licensing contract can sometimes be omitted provided that the licensee has already made it clear which rights they do wish to acquire, e.g., by saying they want "all rights".
It is also strongly recommended that the territory is clearly defined. In section two, this is clearly designated. If it says "worldwide" then the definition is self-explanatory. In section three, the date the rights begin to apply is clearly specified. In this case, it is the date of payment but it is possible to specify other options, e.g., the date of delivery of the material to be used in the film or the date on which the licensing contract was made.
Some rights might be acquired at different times, or in different territories, and so the contract should allow for this.
Section four of the sample sets out the terms for payment. This is made on or before a specific date and in the form of an advance with royalties to follow. However, it is common to have licensing contracts in which payment is made without royalties being specified. In this case, the contract sometimes states the amount of future fees but not the calculation and payment schedule. It is worth noting that contracts should not set out the royalty as an amount per minute, as this could encourage behavior that could lead to a breach of contract situation.
Section five of the contract states that nothing will invalidate the contract and that it is legally enforceable. It sets out that any amendments must be made in writing and signed by persons that have "full legal authority" to do so. This section also states that the law governing the contract is not specified. However, in the UK, the Copyright, Designs and Patents Act 1988 (c. 48) implies that UK law applies to the whole of the UK. In the USA, Section 301(a) of Title 17 of the United States Code grants "copyright protection to original works of authorship fixed in a tangible medium of expression." Articles 2-106 and 2-113 (Revised) of the Quebec Civil Code (RSC 1991, c. 64) and Article 77 of the Civil Code of the Federal District (FRC) also govern copyright in Canada, whereas the Copyright Act (RSC 1970, c. C-30) protects copyrights in Canada.
Music License Contract – How To Draft One?
One way to know if a contract is legitimate is when legal jargon is placed inside of the agreement. The language used is meant to convey what is allowed and not allowed in a legal situation. Even when it comes to music licensing, the agreements are no different. A good contract will breakdown the agreement between the parties involved.
Not all music licensing contracts are the same. With that being said, it is important to stick to the basics. The music licensing contract should consist of the following:
- The date of agreement;
- The parties involved;
- A detailed description of subject matter involved in the agreement;
- Terms of the agreement;
- Compensation/additional compensation;
- Boundaries of use;
- Renewal opportunities for parties involved;
- Confidentiality terms;
- Model releases;
- Indemnification;
- Signature space.
Should the parties involved be trustworthy enough, it should be mentioned in the contract that nothing wrong will be done with the content on either part of the agreement. This can help to avoid lawsuits from both ends.
Music License Contract – Mistakes to Avoid!
One of the most common errors in music licensing contracts is signing without a thorough review. Whether you think a contract is well-organized and easy to understand or not, always go over the fine print. It is important to investigate the shady wording, particularly when you are signing solely online. You might believe that because a company or person has their own domain name (such as customizedmusic.com), that you can trust them more than if it was a free service such as music4yourvideo.com. Many times the same people are involved with both kinds of services and the latter has better contracts. Even with a company with a real office, you should doubt all of the assurances in the world that their contracts are thoroughly lawyered. It could be your lawyer that will actually realize it is a bad deal, after you’ve signed , which is a risk you don’t want to take.
A few things you’ll want to investigate before signing music licensing contracts include looking for details and evidence of an attempt to realistically implement the 3 points listed above. If you can’t get answers to these questions, don’t sign.
Another common mistake is thinking that most of the music licensing contacts you will make are actually for work-for-hire. You should always be cautious about signing or even receiving offers for work-for-hire projects. There is a lot of legal language which can leave you exposed when performing, as only one party can take that client to court and you don’t want to be dealing with litigation. You should be more cautious about such contracts. Of course even commonly-accepted contracts can be set aside in some litigation so it is recommended to have these assessed on a case-by-case basis anyways. You may be forced to defendant in such a lawsuit, even if you’re not the actual defendant.
Sample Music Licensing Contract Template
Sample Music License Agreement
This Music License Agreement dated _____ (the "Effective Date") is between (insert your name) (the "Licensor") and (insert third party name) (the "Licensee"), (the "Parties").
The Parties agree as follows:
- License. The Licensor grants to the Licensee a royalty-bearing, non-exclusive license to reproduce, distribute, publicly perform, and display the Musical Work in connection with (insert type of use (i.e. magazine, album, musical theater program, website)), and only in the manner set forth in this Agreement. The Licensee shall not have any right to adapt or distribute derivative works of the Musical Work without the Licensor’s prior written consent.
- In consideration for the license granted above, the Licensee agrees to pay the Licensor $_____ within ____ (____) days of entering into this Agreement.
- Duration. The Licensor grants the above license in the Musical Work for _____ paid-up license(s) only. The license for additional uses shall be agreed upon in writing within ____ (____) days of the Licensor’s receipt of a written request for such additional uses from Licensee. Any allowance for increased or decreased costs shall be negotiated and exchanged in writing within _____ (____) days after request for changes in the scope of use.
- Credits. The Licensee agrees to provide the Licensor with the following credit in print and for broadcast:
Written Credit. The Licensee shall include the following printed, written acknowledgment: "Composition (or song) by (Insert your name), Licensed through (Insert Website Name) website"
Credit for Broadcast. For radio broadcasts of the Musical Work, the Licensee agrees to include a voice announcement that states, "Composition (or song) by (Insert your name), Licensed through (Insert Website Name) website."
5. Additional Rights. The Licensor retains all other rights that are not expressly granted to the Licensee in this Agreement.
6. Usage. The Licensee shall be entitled to use the Musical Work only as provided under this Agreement, and not for any other purpose. The Licensee understands and acknowledges that it shall not:
a. Use the Musical Work on a temporary basis, except where it is expressly designated as such in the body of this Agreement;
b. Use the Musical Work for any pornographic, defamatory, immoral, racist, political, or otherwise unsuitable materials (as further described in Section 7 below) unless the Parties expressly agree to such use in writing;
c. Use the Musical Work in such a way that may cause the Licensee or Licensor to breach any applicable laws.
- Permitted Derivative Works. The Licensee shall have the right to edit the Musical Work to conform with a time clock or for other technical requirements for both audio and audiovisual works, provided that the edits made shall not violate the spirit of the Musical Work. In making any such edits, the Licensee shall not change the identifying features of the Musical Work, such as the title, lyric, and/or melody, without the Licensor’s prior express written approval.
- No Registrations. The Licensee agrees that they shall not register the Musical Work with the United States Copyright Office, the American Society of Composers, Authors and Publisher ("ASCAP"), Broadcast Music Inc. ("BMI"), or any similar organization as an original work of authorship.
- Not Assignable. The Parties recognize and agree that the License granted under this Agreement shall not be assignable by the Licensee without the Licensor’s prior express written approval.
- Obligation to Indemnify. The Licensee agrees to indemnify, defend and hold the Licensor harmless against any and all claims and liabilities incurred by the Licensor, and against all losses paid by the Licensor in settlement or judgment of legal proceedings, with the exception of those losses arising from the negligence, recklessness, or intentional misconduct of the Licensor, and subject to the following conditions:
a. Prompt Written Notice. The Licensor shall immediately notify Licensee in writing of any threatened lawsuit, claim, demand, proceeding, dispute or "blackmail attempt" which may give rise to liability under this Agreement; and
b. No Settlement Without Consent. The Licensee shall not be obligated to indemnify Licensor under Section 9(a) for any amounts paid under a settlement, or in settlement of a lawsuit, if the Licensor does not consent to such settlement within ____ (____) business days after receiving written notice from Licensee, unless the Litigation has been finally and unappealably terminated with no finding of liability or admission of wrongdoing against the Licensor.
11. Miscellaneous Provisions. This Agreement constitutes the entire agreement, and supersedes all prior and contemporaneous understandings and agreements between the Parties concerning the subject matter of this Agreement. The Licensor may waive or modify any term of this Agreement, but no waiver or modification shall be effective unless in writing and signed or initiallyed by the Party against whom enforcement is sought.
IN WITNESS WHEREOF, the Parties have executed this Music License Agreement as of the Effective Date.
Conclusion and Additional Resources
As we have seen, music licensing contracts play a crucial role in the music industry, ensuring that the rights of both creators and licensees are protected and that appropriate compensation is provided for the use of copyrighted material. In a constantly evolving industry that sees new trends emerging on a regular basis, it is imperative that both sides of the table have access to a well-drafted music licensing contract that can be consulted in the legal event of a dispute .
If you believe that you may require legal consultancy or representation on any matter regarding licensing contracts or any other part of the music industry, you can get in touch with our dedicated team here for advice and further information. Alternatively, you may wish to read up more on licensing contracts and intellectual property in the music industry via the following articles:
Music Rights in the UK
Copyright Infringement in the Music Business
The Roles of Publishing in Music
All You Need to Know About Music Publishing Administration
Why Music Rights Are So Important