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Music Licensing — Getting It Right

9 Feb, 2015 By: Jason Peterson

Music licensing for movie and television programs can be complex, and it is vital to get it right to ensure proper monetization and to avoid copyright liability issues.

Music is an asset. It is important to recognize it can provide significant revenue opportunities to whoever holds the rights to it. In fact, the global music publishing industry generates more than $10 billion in revenue annually. Visual media companies have an opportunity to capture some of this value.

If you own the copyright to music in an audio-visual work you can derive income from:
• “Public performance royalties” when
  o the music composition is performed on broadcast television, cable television, or the Internet;
  o the sound recording is performed by way of digital audio transmissions in the United States and through any medium in most countries abroad;
• “Mechanical reproduction” royalties when the music is reproduced in phonorecords such as a soundtrack album
• In “synchronization” licenses when the music is licensed by other audio/visual producers for subsequent productions.
• Borrowing against future music revenue as gap financing for production; and
• Selling your music library, as many have done.

So if you commission music for a video production, you should contemplate doing it as a “work for hire,” meaning the composer is a contractor and you retain the rights to whatever musical work he or she creates. That way, you will collect the royalties (and because the copyright in a work for hire lasts for 95 years from first publication or 120 years from creation — whichever is shorter — your heirs may continue to collect royalties well into the future).

Of course, many productions will use already existing music — in which case, you should assume that the work is copyrighted and you will need a license. Because music copyrights usually consist of two separate copyrights — the copyright for the music composition and the copyright for the sound recording in which the composition is fixed — one must determine who holds each.

Once you have identified the copyright holders, you have to negotiate a license. As an audio-visual licensee, you need to acquire a synchronization license from both the holders of the copyrights of the sound recording (the “record label”) and the composition (the “publisher”). This license will provide the right to make a derivative work (the audio-visual program with music synchronized and mixed in) and to reproduce, distribute, publicly perform and display the derivative work with the sound recording and/or music composition embedded.

One way to avoid the pitfalls of music licensing is to use music that is in the public domain, meaning not subject to copyright. These include very old compositions and recordings (and works from before 1964 that did not have their copyrights renewed) and royalty-free stock sound recordings. There is also the “fair use” exception to copyright, but that is an area fraught with litigation.

Because copyright infringement is essentially strict liability — it doesn’t matter whether you intended to do it or just made a mistake — getting all of this right is essential. (And, as a practical matter, it is advisable to purchase errors and omissions insurance for your production that includes coverage for copyright lawsuits due to the music infringing someone's rights.)

To provide some clarity in this area, the Entertainment Merchants Association (EMA) recently released a white paper on music licensing for audio-visual works to provide an overview of the applicable laws, practices and issues involved in successfully sourcing and licensing music for synchronization with audio-visual programming. The white paper is available at http://www.entmerch.org/digitalema/ema-music-rights-white.pdf.

Jason Peterson is CEO of ContentBridge, a leading supplier of digital supply chain services and technology to the media industry, and is a member of the Entertainment Merchants Association’s Digital Steering Committee.

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