Music Licensing Quicksand: Common Pitfalls To Watch Out For After The Ink Dries

Music Licensing Quicksand: Common Pitfalls To Watch Out For After The Ink Dries

By Christopher Rucks | Music Dealers

You’ve signed your license agreements. You’ve licensed the song you were hoping for, within the budget you were working with. Your project airs and you’ve checked it off of your list. All is going according to plan. Nice job. But hold on a second. There are a few instances where you may not be done, instances that require more attention after the ink dries on the contract. And you want to have some knowledge about these situations beforehand so if they do pop up, you’re prepared for these post-license circumstances and know how to handle them. Let’s take a look at three items that can occur after the ink dries.

Hey, that’s my music in your commercial; I wasn’t aware of any license, I’m suing!

After you come to, pick yourself up from the floor and have a seat. Breathe. Now that you’ve recovered from your mild heart attack, after reading that message in your inbox from an irate artist or music producer, let’s think rationally.

Typically, legitimate music licensing business has been done. But of course, you must investigate. Here’s what we’ve seen happen several times.

A representative, perhaps a manager, has signed an agreement certifying control of the music and the ability to license it, and has provided that music to a company for them to sync. However, that representative may not control that music and may not be in a position to license that material. It could even be an old manager that has long since been fired, but added that artist’s music to a number of music libraries, neglecting to transfer the accounts to the artist. In such cases, an artist or copyright holder may be unaware that a license has occurred, heard their music on TV or in an advertisement, had a heart attack, and leapt to their computer to peruse LinkedIn to find someone to berate. And they found you.

Typically, these representatives legally certify that they have the right to pitch said music and indemnify all parties against legal issues in the process. So breath. Relax. Don’t go into DEFCON mode just yet. Send an email to your music licensor and let them know what’s up. Then sort it out from there.

Let’s check out scenario two.
The correct rights holder, who can license the music and has permission from both sides, has indeed legitimately licensed music. But, perhaps they have a poor relationship or terrible communication with their artist.

The copyright owner grants permission to sync, directly or through a synch agency, and the song is licensed and airs on television. The copyright owner may not immediately inform the artist that a license has occurred. The clueless artist, in the middle of devouring a bowl of mac and cheese, catches an ad or TV show with his music in it. “What the f….,” he mouths, his last word muffled by the mass of cheesy noodles in his mouth. Immediately, the artist bounds to the computer to find someone on LinkedIn who he can berate.

While the errors in these particular examples are on the artist side of things, they still suck because they spook the hell out of everyone involved and keep everyone walking on eggshells until the mystery can be solved. Remain calm while you get to the bottom of the situation. There may be no cause for alarm.

Oh, You’re Distributing My Music? Cut The Check!

There are a few performance royalty organizations (PRO’s) across the globe that we at Music Dealers refer to as, “special societies.” And they are indeed special. These performance rights organizations monitor not only the performance aspect of a composition, but also administer mechanicals for the composition as well. These societies define the use of a song being synched to a visual media and then distributed via digital download, Blu-ray disc, or in a video game, for example, as a mechanical use, and as such, require a separate license! Let’s break that down with a story.

So let’s say a production company, Liquify Minds, obtains a sync license for the use of a song in a TV show. The master is clear; the publishing is clear; everything is all good. The writer/publisher of the song originates from Canada, and is a member of the PRO, SOCAN. The show is a total success and Liquify Minds decides to release the series on Blu-ray.

50,000 units are pressed and distributed. SOCAN, the writer’s PRO, knows one of their members has music on an episode of this blu-ray. And because SOCAN is one of these special societies, they require a mechanical license for every one of those units that feature their writer’s music.

Liquify Minds receives notification from SOCAN that they will need to pony up a mechanical license at the standard Canadian mechanical royalty rate of 8.3 cents per unit pressed (50,000 x .083 = $4,150). Liquify Minds howls a number of expletive terms in protest, then calls their attorney, Arm & Leg, LLP, to confirm. Yes. Liquify Minds is about to cut a check. Like many production companies, they were unaware of these “special societies” and the ensuing mechanical licenses that come from reproducing physical/digital copies containing their writer’s and publisher’s works.

Oh, You Need More Rights? Suuuuuuure!

Every so often, a piece of media will perform so well that a client hopes to capitalize off of that success by proliferating that content into new media that was not a part of the original strategy.

Story time! So let’s say there’s an advertising agency, Sell Mo’ Stuff, Inc, and they’ve produced an exceptional piece of web content for their client, Filthy Pickle Relish. Initially, Filthy Pickle Relish only wanted to create an awesome web-based piece of advertising to run on sites like YouTube and Hulu. Sell Mo’ Stuff’s web ad turns into a hit and Filthy Pickle Relish wants to capitalize on the piece by running it as a national TV campaign.

Sell Mo’ Stuff originally negotiated a $1,000 synch license based on a web use. So Sell Mo’ Stuff contacts the music licensing agency from which they acquired the music, The Kitchen Synch, and asks them for new rights to use the music for a national campaign. The Kitchen Synch, recognizing the desperate client in their midst who needs them in order to move a very important project forward and please their client, decides to sink their fangs into Sell Mo Stuff’s jugular and lustfully milk them dry. “$100,000!”

Sell Mo’ Stuff is appalled that their vendor would charge them such a fee in their time of need. The artist is nowhere near large enough to command such a fee for a national ad. But the music is an integral part of the success of the ad; a huge part of the reason why it caught on. Kitchen Synch won’t budge an inch. Sell Mo’ shamefully drags itself back to Filthy Pickle to relay the news. Filthy Pickle reluctantly agrees, but begins looking for a new creative agency. And so goes the story of having to go back for new rights with less than reputable licensors.

Now, this situation isn’t necessarily avoidable. You can’t anticipate the future of a piece of content or the success of a project. You license content and pay a fee based on your current need. There’s no way to avoid being in a position like Sell Mo Stuff. But, what you can do is examine the relationship you have with your music licensing vendor. Do they have your best interests at heart? Do they want to see you become successful as a business or client, or do they only salivate at the thought of rummaging through your corporate pockets?

Conclusion
Depending on the volume of music you license and the particular areas within the industry that you specialize, you may encounter some of these issues. In regard to threats from copyright holders, hopefully those situations play out like the scenarios described. If not, you could be in for a rough time. Work with reputable music licensing firms that are on top of their data and research, and hopefully you’ll be fine.

Understand that there are a handful of countries where the PRO’s administer both performance and mechanical royalties. These “special societies” are a little-known aspect of the industry that affect companies that reproduce and distribute content for sale. If your content contains music from a writer or performer represented by one of these societies, and you distribute that content, whether it’s available for download, sold on Blu-ray, or as a part of a videogame, you are subject to a mechanical license at that particular country’s rate.

By addressing these publishing and licensing issues, we hope to get the word out and educate licensees to help them avoid these expensive traps down the road. So now that you’ve earned your “sleep with one eye open” badge, we’ll hit you with some more informative music licensing information in the future.

Photo Credit: eamoncurry123 
Photo Credit: electricnerve 
Photo Credit: Steven Depolo