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Sell this way or not?...regards licensing
Old 31st August 2012
  #1
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HUFO_2000's Avatar
Red face Sell this way or not?...regards licensing

Ok so,
I've done quite a bit of searching and am considerably close to starting my own track licensing store before I ran into a pretty important question.

My track style ranges vastly from Hip-Hop to Orchestra, Electronic to Video Games. From what I understood, when you offer a track under a non-exclusive license, you still retain the copyright, and users can only use the track on one commercial release and up to an amount stipulated by your contract (I've seen 1000 - 3000 combined physical and digital on most contracts).

For exclusive, the user gets unlimited use of the track and I've recently learned that it's pretty much considered a "buy out" of the track.

First question:
If the user has unlimited use of the track and it's considered a "buy out", what advantage would I still have of maintaining the copyright if I can't do anything with the track anymore?

I've also found a post on here stating the disadvantages of beats for sale online, one of which is that most tracks are two track mixes. The advantage of my store is that when you buy, you get a full organized PT session, WAV, and AIFF file.

Second question:
Since I like making a lot of video game tracks, is it smart to put these tracks up for an exclusive agreement in my store considering how much more involved these tracks are? Would a higher premium be advantageous? Though, I believe it's also true that a lot of video game tracks are made under a "Work for Hire" agreement anyway correct? So it's not like I'd be making royalties back either way if I understand?

Thanks guys in advance :D

Edit:
On the issue with retaining the copyright after you sell the exclusive rights for use of the track, what about mechanical and synchronization? Do I make any money there even though I technically would not make anything past the point of sale of the exclusive track and the sales made by the licensee ?
Old 1st September 2012
  #2
Here for the gear
 

Hi. I'm not entirely sure if I'm reading your post correctly, but anyway I've provided a lot of music for TV and library CDs so maybe can help.

Every time I'm commissioned to compose and produce a track, part of my fee goes towards providing a licence for the client to use the track for their needs without them having to pay repeat fees each time the track is broadcast. This is called a buy out and involves me preparing a document that grants permission for them to the use the track in the way they have requested.

I can sell buy out licences to several clients to use the same track. A buy out doesn't mean its exclusive. I've been commissioned to provide original music for over 300 productions and only once given exclusivity. Its something that some high end clients might want, for example a big budget commercial where they don't want other people using that track, but most of time these days people just want access to cheap music and don't expect exclusivity. If you want to offer exclusivity, I would charge per month.
Old 1st September 2012
  #3
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HUFO_2000's Avatar
Unhappy

Ok so Buy out is something different than obtaining an exclusive license.

*sigh* ok so from how I originally understood it:
1. Non-Exclusive License
*Grants the Licensee the use of the track on one commercial release
*Can only be sold over 1000 - 3000 combined units (based on agreement)
*The Licensor retains his copyright
*The Licensor can resell the track to be used again by other clients.

2. Exclusive License
*Grants the Licensee the use of the track on unlimited commercial release
*Can sell unlimited combined units (based on agreement)
*The Licensor retains his copyright
*The Licensor CAN'T resell the track to be used again by other clients.

3. Buy Out
*All that the Exclusive license provides, but Licensor surrenders the copyright to the Licensee.

That was my original understanding of each. My question is regarding the differences in 2 and 3 and where the advantage of retaining your copyright as part of the Exclusive license poses as a benefit. I can't resell it and I dont think I can make any royalties from it (right?). I think the only advantage I see so far is that you can probably still claim the credit as "the person who created the track" and is considered less of a financial advantage.

Maybe I have the order wrong? But wait....how can you sell a track for buy out multiple times if you no longer own it after the first transaction?

EDIT:
Just found something interesting in an exclusive license agreement I was researching:

CONDITIONAL ROYALTY: In the event a master recording containing the licensed Instrumental is contained on an album where the gross receipts received by the label by virtue of the albums distribute exceeds one million dollars ($1,000,000), Licensor shall be entitled to a producer royalty of five percent (5%) of Net Profits, retroactive to album one.
Old 1st September 2012
  #4
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AwwDeOhh's Avatar
 

The more rights the Licensee wants, the more you should charge as the licensor.

If someone wants exclusive, you charge accordingly. Remember you won't be able to license this music to others for the period of the contract, so you add in all the costs of losing out on other potential buisness.

I would recommend, if they really DO need exclusive, that you stipulate a time frame (eg. 3 years, 5 years, ect.) in which that right expires. You can put in renegotiation clauses when the rights revert back to you, if they want first dibs on another term.

I highly recommend contacting a (music) lawyer to iron out all the fine print, and never ever sign anything you don't understand without a lawyer first explaining your options.
Old 1st September 2012
  #5
Here for the gear
 

Can I ask you to confirm who you are planning to sell your music to? I'm just wondering if you are actually making sample CD style music to sell to other musicians and producers or if, like I originally thought, you are making production music.

If you're making production music, check out Audio Network who are one of the biggest in the UK. They are dictating the global value of production music at the moment and you need to be offering a service as competitive as theirs. Remember there are other royalties you will receive every time the music is broadcast even if you have sold an unlimited licence. In the UK this is collected by the PRS.

If you're making sample library music for artists and producers to use in their tracks, you won't be receiving any future royalties, you'll be selling them a non exclusive buy out to use the tracks any which way they please.
Old 1st September 2012
  #6
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HUFO_2000's Avatar
To answer your question, it's sort of both. Mostly however it's backing tracks for people looking for mixtape music, etc., but I wanted to also add tracks for game developers to utilize. Don't really think that commercial jingle music would fit in this store, but then again who knows.

Could you expound on the broadcast royalties you were talking about earlier? I'm guessing that a blend of both would be the best way to go aka some tracks leased under non-exclusive and exclusive, and the other thing you were talking about.

Managing the product is my problem right now as I'm not entirely sure what I'm loosing.

Either way, I'll also take a look at how Audio Network is doing it as they seem similar to what I'm doing.

I hate the fact that it's looking more and more likely to consult with a lawyer as I know that's going to be friggin expensive...unless anyone has tips on getting legal advice? Sucks to have to pay like $500 to get a yes or a no fml -_-.
Old 1st September 2012
  #7
Here for the gear
 

I think the two target markets are completely different and I don't think you should try to sell the same thing to both. If you're selling production music, the clients will mostly be TV producers, directors and editors; they won't want split tracks, they'll want a mastered stereo track; an alternate 29 second version is a bonus (this is the most common length for a TV commercial), 39, 19 and 9 seconds versions might be useful also (there's half a second of silence at the start and end of every TV commercial).

With sample libraries its more important to have split tracks; maybe loopable regions? To be honest its a market I've never produced for. Maybe you could write a clause into the licence that you'll get a 5% share of sales if the track makes a lot of money, but I think thats over-complicating it and will put people off.

R.E royalties - In the UK the PRS collect money from worldwide broadcasters, BBC, Sky, YouTube, etc and distribute it to composers. They calculate how much to pay according to estimated audience size, quality of music (orchestral gets most), and how often it was played. Prime time on a big network with say >20 million viewers might get £100 per minute, a small regional broadcast late night to 50k viewers might get 1p per minute. I got lucky one time and received thousands from a show in South Africa that played one of my tunes in the background on a continuous loop all night every night for 2 years. Others times I'll be really excited because my music got broadcast on a major network, but it only played once so I only got £50.

I think ASCAP is the US equivalent.
Old 4th September 2012
  #8
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HUFO_2000's Avatar
Red face

I agree,
Rather than putting both type of clients together, it would be best to separate them. You are also right that in the US, one of the performance rights organizations is ASCAP, which thankfully I'm a member of .

What I have seen (above) on an exclusive agreement which seems like a good idea to me, is that I would start making any royalties back until the sales of that track reach it's first million. After that, it's 5% (like you said ironically)

So now (thankfully) I'm down to two questions. May have to do some research to find them in detail but:

1. In either case (exclusive or non-exclusive), would I be receiving anything from PRO's (performance rights organizations) since I still own the copyright?

2. Do you think it would be better to try to find a buyer for these tracks first before I offer them up under a non-exclusive/exclusive agreement? Or should I just put them up for grabs? (I think in this situation it might be obvious as of course, if you have the work, why sell your opportunity to attain royalties if you don't have to? But I'm still throwing the question out there).
Old 4th September 2012
  #9
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drBill's Avatar
Quote:
Originally Posted by HUFO_2000 View Post
What I have seen (above) on an exclusive agreement which seems like a good idea to me, is that I would start making any royalties back until the sales of that track reach it's first million. After that, it's 5% (like you said ironically)
Do you have any idea how many of the close to 100,000 projects released a year get even close to the million sales mark? (in 2012 you can probably count them on your fingers and toes) And even the few that make that mark - ALL of them are going to be major artists with track records. They will not be buying beats online from your store. So you will never get your 5%.

You might want to research things a bit before pinning your business plan on an already failed model. Good luck. And I second the attorney suggestion. Although expensive, it's a small bit of what you will loose if you make an ill informed decision.

cheers,

bp
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Old 5th September 2012
  #10
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HUFO_2000's Avatar
Red face

Yeah,

I also bought the ebook "The Music Powers that be..." book (which on the issue of licensing was a very good read) and so far it's not looking good. I will agree that a little of something is better than all of nothing (probably screwed that up somewhere lol), but to what cost?

One advantage I did see (and was a good analogy made on another forum) is that you situate your product like a Walmart (which is where the non-exclusive and exclusive tracks would come in to play). You cater to your customers looking for a toothbrush, and those looking for an LED TV.

In the end however, I think it's better to work the agreement out individually on a per track basis. Just because I don't have a buyer for a track in my inventory, doesn't necessarily mean I want to put up the track as royalty free, which from every source I've found thus far is exactly what you are doing. In most cases however, you still retain the copyright/publishing, but it still greatly limits the earning potential. Plus also, it begins to become an administrative nightmare.

Based on what the book said in my limited reading, even though your agreement does state the limits of what you can do with the track, when you have a lot of clients, how effective will you be in tracking each and every client to make sure your track is within the terms of the agreement? Let alone if it's some random buyer? Not saying it's impossible, but for me it seems like too much of a hassle and more than likely improbable.

So what now guys? I think I'll offer price quotes and sales on an individual basis, but If you have some tracks (instrumentals) that you want to "Sell" and want to showcase them on your site, but don't want to relinquish your copyright/publishing, and give up all possible royalty earnings, what do you feel would be a viable vehicle for doing so? Any ideas?

ADDITIONAL INFO:
Also, I ran into an argument regarding those who coincidentally do offer their tracks for track out (like I would have). The issue there become more so on the sample clearing aspect than on delivery. The issue is that if you utilized a sample library, loop, etc. that you'd have to look AGAIN to see if you'd be fine distributing said loop or sample as part of a tracked out compilation as essentially you are almost reselling the sample. I'd argue with that stating that, no the product isn't the sample but the session that's including the sample. Also, who's to know?! That specific vendor or entity would have to physically buy the track, dig into the session, etc. (maybe), but IDK.

MORE ADDITIONAL INFO ON TOPIC:
http://www.futureproducers.com/forum...t-know-270621/
http://www.musicpowers.com/
http://ezinearticles.com/?Hip-Hop-Be...ing&id=5371204 (passage from book)
http://ezinearticles.com/?Exclusive-...cks&id=6802977
Old 5th September 2012
  #11
Gear Nut
 
HUFO_2000's Avatar
UPDATE:
Think I may have come up with a solution and wanted to see what you guys think. How about I go about the store solution like I was doing originally, and offer all tracks on there under non-exclusive agreements (even the hot ones with no buyers). If the client wants exclusivity or needs to purchase an additional license due to over sale or just because of modulated intent, then I can handle the contract individually with an artist/producer contract, accessing the intent and scope. In this way, I'm not locked into relinquishing my royalty potential (if any) unintentionally.
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