The right song can set the tone, pull a scene together, or capture an emotion better than the spoken word. If you’ve got your heart set on a certain song to make that happen, we’re here to help you fulfill that vision. Whether you're a musician, music producer, artist, filmmaker, show producer, content creator, game developer, ad agency, or another type of music licensor, avoiding the most common music licensing mistakes can be critical to a smooth production or release of your project. This article is the first installment of a three-part series on music licensing designed to help you prevent common licensing mistakes, understand your licensing agreements better, and gain the know-how to license music effectively now and into the future. We’ll publish the following two articles “How to Legally Clear Your Next Sample: A Step by Step Guide” and “The Top Ten Things You Need To Know About Music Licensing Agreements” in the next several weeks. We’ve ranked our list from most to least costly based on potential financial consequences.
1. Failing to Clear the Sample
If you’re going to use a copyrighted piece of music in your work or borrow distinctive elements (e.g. melodies, chord changes or signature sounds) from a hit song, you must seek out the permission of the copyright holders. It’s that simple and yet even major artists still make this mistake. In a famous 2015 copyright infringement case over the song “Blurred Lines”, Robin Thicke and Pharrell Williams were found liable for copyright infringement of a Marvin Gaye song and had to pay out over $5 million in damages. Another famous example is The Verve’s “Bittersweet Symphony” that borrowed from Rolling Stones song. The Verve had to give up 100% of their royalties. Don’t just “take your chances”. The copyright holders will have total leverage to stop your song or film in its tracks. It will undoubtedly cost you more to clear or license music after your song or production has been released, particularly if it’s already making money. Advances in technology are also making catching infringement that much easier.
Costliness Rating: 9-10 (High)
Failing to properly clear a sample or license a musical work can lead to serious copyright infringement cases, where statutory penalties can reach up to $150,000 per infringement. For film or show producers, just one improperly licensed song on your soundtrack can result in a full recall and cost you thousands. Even if you’re fortunate enough to catch the issue before release, it can still lead to production delays and cost overruns. The consequences can be severe, both financially and reputationally.
2. Not Clearing Both the Master Recording and Musical Composition Copyrights
With every piece of music, there are two copyrights – the musical composition copyright (chords & lyrics) and the sound recording copyright (the master recording copyright). This means there are two separate licenses to obtain for each musical recording and often from two different copyright holders. The sound recording copyright (the master) is often owned by a record label, while the composition copyright is held by a publishing company, which is responsible for paying out the writers of the music. Failing to properly license both means an incomplete licensing. This is a common mistake for novices that don't realize there are two copyrights in each piece of music.
Costliness Rating: 9-10 (High)
Many people find one copyright holder and forget to find the other. Also, many artists and copyright holders presume that they own both copyrights when in fact the copyrights are owned separately or are shared amongst several writers, so don't just take their word for it, go and find out! Failing to clear both types of copyrights can lead to the same consequences mentioned above, namely an expensive copyright infringement suit, delays in production, or total recalls of a released work.
3. Waiting Too Long to Start the Clearance Process
Clearing samples or licensing music towards the end of production can be a dangerous game. It’s easy to put this off as a secondary priority when you’re in the midst of pre-production or principal photography, but waiting too long can have real consequences. Maybe you can’t find the proper copyright holders because you didn't realize there'd be multiple holders. Other times the asking price is too high and you have to resort to your backup song choice. Then there's the possibility of rejections based on objections to your work. If your negotiation process takes longer than expected or breaks down while you're facing looming deadlines, you’ve effectively put the whole production at risk. A proper clearance process should be started as soon as reasonably possible. You can often reserve or hold licenses for a deposit, typically 10 to 30% of the total license amount.
Costliness Ranking: 7-10 (High)
Any delays in production can have a cascading financial cost in cost overruns and lost revenues. Licensing delays compound financial losses since they run up expenses in every facet of post-production. So while the actual cost of securing the license might not change if you start late, your actual and potential losses can add up quite quickly.
4. Thinking You Just Need Permission From One Writer or Publishing Company
In general copyright law, joint authorship (multiple songwriters) creates an undivided interest in the work where each writer can grant a non-exclusive license without needing the permission of the others. You only need permission from one writer for a license. Music industry practices are different however. Why? Firstly, some international countries require consent from all writers for a lawful licensing. So if you want to distribute the work globally, you'll have to abide by international laws. Even more so, the U.S. music industry has created its own framework requiring complete permissions too. Musical composition copyrights need to be owned by publishing companies for performing rights organizations (PROs) to properly distribute royalty money. Without one, you won’t get paid. Buried in the administrative fine print of many publishing agreements is a requirement that music licenses require the permission of all involved writers. This gives the publishing companies more leverage in that they can more easily deny license fees they find too low. Because of this administrative clause, even a minority-share writer's publishing company can deny the license. It’s a way the music industry cuts out lowball claims by keeping you from shopping minority-writers for the lowest fee. You’ll have to seek out the permission and consent of all writers through their respective publishing companies, no matter how many.
Costliness Rating: 5-9 (Medium to High)
It is the publishing company’s job to secure money through their catalog of songs. It’s their primary and sometimes only reason for existing. So while a writer might be amenable to your proposed licensing fee, you can bet his publishing company sets a higher bar. Even a writer who owns just one percent of the song could kill your license. This might create bad blood with the other writers, but it's within his legal rights. If you fail to clear all the rights with each writer before release, you may end up paying a higher or arbitrary rate since they'll know going back and re-editing would be costly anyways.
5. Not Getting Agreements in Writing
This should go without saying, but it still happens! Picture this: You’re at an industry party and having a great conversation with a songwriter whose indie song is perfect for your independent film. After feeling him out, you ask directly if you can use the song and he agrees! You spend the next six weeks of production relying on his verbal promise. But when you do get to formalizing the agreement, there it is, a snafu! His publishing company most certainly does not remember the conversation and in any case, his co-writer doesn’t want to license the song for such a “low” fee. At this point, your budget is maxed out and there’s nothing you can do without burning more cash! It happens, but make sure it happens to someone else.
Costliness Rating: 5-10 (Medium to High)
Your ability to work out of these situations is severely limited without a written agreement. Do yourself a favor and formalize your agreements as soon as possible even if it’s just to reserve a hold on the song for future use!
6. Ignoring the Fine Print Or Not Using An Attorney
There are key terms and clauses in music licensing agreements that would stand out to an attorney that just wouldn’t register as important to the uninitiated. A common mistake of do-it-yourself license agreements is skimming or ignoring the fine print presuming that your internet contract template was written by a competent attorney. Another is thinking that the longer or more verbose a clause is, the more protective it is. Intuitive, but wrong. A poorly drafted clause can create more confusion or ambiguity than not having one at all. In general, it's always advisable to have an attorney review your license agreement prior to finalizing it. Attorney fees can be expensive, but if there’s enough potential revenue in your agreement, it will usually pay itself back in higher and more secure revenues and royalties, better contractual protections, and overall peace of mind.
Costliness Rating: 1-10 (Low to High)
Every licensing situation is different so if it’s a single-use fee and you feel comfortable doing it on your own, then you should consider it. But as the size of the licensing fee and number of potential revenue streams increases, so does the potential loss from mistakes or oversights. Sometimes this is cleaning up language and sometimes it’s pushing for higher fees or percentages. One part of an attorney’s job is a serious research dive into your situation and a balancing test of all the factors affecting your licensing agreements. Compared to the life of a licensing agreement (sometimes “in perpetuity”), attorney fees can be a sound investment. Either way, don't ignore the fine print!
7. Not Future-Proofing Your Licensing Agreements
Music mediums change over time and sometimes beyond the music industry’s expectations. Vinyl records gave way to compact discs, compact discs gave way to MPEG-1 Audio Layer 3 (MP3s), and MP3s gave way to on-demand streaming platforms. Streaming platforms will give way to….well, we don't know yet, but probably some sort of AI consumer good! The point being that as technology advances so do the ways we consume music. Just consider all the licensees that failed to contract for the change from compact discs to digital formats! If you fail to future-proof your agreements by including clauses for future technologies, you might be foregoing unforeseen revenues.
Costliness Rating: 1-10 (Low to High)
Assessing the costs of missing out on new technologies is hard to gauge since there’s no way to know what those royalty revenue might look be. Another streaming technology with low penny rates might not be that much money, but a new type of sync performance technology might yield thousands upon thousands of dollars. One silver lining if this does occur is that you’re only out potential money and not negative fees, penalties, or sunk costs. Just know that if you don’t future-proof your licenses, you may end up kicking yourself down the road!
8. Underestimating the Role of Licensing Fees in Budget Planning
It’s easy to underestimate how much music licensing fees can cost. Depending on the songs, licensing fees can sometimes eat into your budget. There are two ways to prevent this. First, budget out an appropriate amount for your project (usually represented as single or small double-digit percentage of your total budget) and work your production plan from there. The other is to inquire about your favorite picks early to gauge your upfront fees and then make your executive decisions from there. Most productions and music supervisors know to keep their options open in case a certain license doesn’t work out. If a license is going to stretch your budget, sometimes the best thing to do is walk away.
Costliness Rating : 3-7 (Low to Medium)
If you put together a reasonable licensing plan in advance, you can avoid the budget creep that comes from unexpected license fees. Stay flexible and you’ll be ok, but remember that the later you start or the more stubborn you are, the more costly this mistake may become.
9. Using Unlicensed Samples in Promotional Content
Promotional content, such as trailers, social media ads, or teasers, often includes music that needs to be approved or cleared separately. The licensing of a song for your feature film does not entitle you to use the song in the trailer unless contracted. Fees for trailers and ads are contracted separately or additionally. It doesn’t matter if you buried it deep in the audio mix or are just using a snippet of the song, you’ll need to consider it the same as any other piece of music in your production.
Costliness Rating: 3-7 (Low to Medium)
Your saving grace for making this mistake is that it’s easier and cheaper to re-produce an edited version of a 90-second trailer than recall an entire film and piss of your distributors. If you’re efficient, this could happen a matter of days at a reasonable expense.
10. Assuming Unknown or Obscure Songs Are Cheap to License
It’s naïve but not surprising to presume that license fees for rare or unknown songs will be low. However, remember there’s no set fee structure for licenses, every copyright owner gets to determine how much their license fee will be. If one of the songwriters has industry recognition (but maybe not public recognition), that might affect the licensing fee as well. Additionally, a song that has prominence in a niche or sub-culture of music often command higher fees than expected. Don’t presume, ask.
Costliness Rating: 2-6 (Low to Medium)
In general these are situations that you can walk away from and consider alternatives. These situations will rarely lead to the type of compounding losses mentioned in the mistakes above. Also, at the non-major levels, you will also find writers are more amenable to deal sweeteners like post-release revenues or royalties.
Conclusion
That was a lot of information in one blog post, but we hope you revisit it as necessary. If learn to avoid these mistakes or at least mitigate your losses, we feel like we're fulfilling our mission statement of helping your creative business become more profitable. Over the next few weeks, we’ll post two complementary posts to this one - “How to Legally Clear Your Next Sample” and “The Top Ten Things You Need To Know About Music Licensing Agreements” in the next several weeks. Keep an eye out for them if this is information you need for your business!
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