Music Licensing 101

Music Licensing 101

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In my line of work, I meet a LOT of music composers who fear the music licensing model.

Why? Because of low price tags.

First, let’s define music licensing, so that everyone is on the same page.

Music licensing is a business practice by which a copyright holder (the music producer) grants the right to use his copyrighted work (the beat) publicly. Types of licensing contracts include:

A flat fee for a defined period of usage
Royalty payments determined by the number of copies of the work sold or the total revenues acquired as a result of its distribution

Let’s define what a license is: an agreement between the composer or library acting as the composer’s publisher, and the person or entity who want to use the song. The license has 3 main parts:

The media (is it going to appear on youtube, TV, radio?)
The term (for how long?)
And the territory (national/international)

Most likely, you will sell licenses of the first type, with the following characteristics:

Internet
Perpetuity
International

The market has shifted towards this license type to accommodate the buyers, and by doing so, have dramatically boosted their sales volume.

I found this cool article on the website newartistmodel.com, which shows 6 ways to make $3,000 through music licensing.


Buyer Type License Cost Number of sales
Youtuber $20 150
Videographer $60 50
Indie Film Soundtrack $200 15
Indie Film Trailer $500 6
Corporate Video $1,000 3
Advertisement $3,000 1

This breakdown shows you just how manageable it becomes to make good money through music licensing. Add the power of the internet, a steady supply of customers thanks to music licensing marketplaces, and you get the secret recipe myself and thousands of composers worldwide use to live of beats.

Another great aspect of modern music licensing is that creators get to keep all their copyrights. Back in the day, we were usually offered a higher upfront fee for an exclusive license for which we sold our copyrights to our customers (usually production companies.

To me, it’s a WIN WIN WIN situation.

You can “sell” your beat as many times as you want, you keep your intellectual property, and many more customers can profit from working with you at a much lower price.

Another awesome aspect of music licensing are royalties paid through your PRO, or performance rights organization. This means that if you sell a license for a TV show, you get money upfront (usually around $200) AND royalties on the backend.

That’s a second, separate source of income from the same song sale!