Now You Know Everything About Licensing Music In Films

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This is the sixth installment of an 11-part series on music industry agreements by attorney and legal author Steve Gordon, author of The Future of the Music Business (Hal Leonard 4th Ed 2015).  Steve’s earlier installments covered contracts for indie producerssynchronization licensing, management agreements, music publishing agreements, and production agreements (from hell).  Robert Seigel is a co-author of this piece.

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In this installment, we will discuss two different forms of agreement: composer deals for the creation of music to be used throughout a movie, and an agreement for the recording and licensing of a previously written but unreleased single song for a film.  If you are a filmmaker seeking previously recorded and commercially released music, you may be interested in reading Part II of my book, The Future of the Music Business, which includes a comprehensive discussion on how to clear music for movies.

Producers should be aware of at least one fact: licensing popular prerecorded music can be very expensive!

For instance, one of the authors of this article recently received a quote of $50,000 for a Tom Petty song for a feature film, even though the movie was a low budget Dutch language production with extremely limited commercial potential.  This quote was just for the song, or underlying musical composition (see the last installment in this series, Now You Know Everything about Music Publishing, for a discussion of the difference between musical works and sound recordings.)

The client would have had to pay another $50,000 to use Petty’s recording.  This article is aimed at benefiting musicians who have been offered the opportunity to write new music for a film.  But for filmmakers who read this article, know that hiring a composer to create music for your movie can save you a great deal of money.

 

Composer Agreements

The key terms of a contract between a film producer and a composer are:

(i) whether the composer will be responsible for recording as well as writing the music;
(ii) the fee payable to the composer;
(iii) the time schedule for the delivery of the music;
(iv) the composer’s credit;
(v) how a composer would be compensated if there is a soundtrack album; and importantly
(vi) the permitted use and ownership of the music itself.

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Fees

In a conventional composer agreement, the composer is responsible for producing or supervising the production of the music as well as composing it. The composer is paid a fee for those services, and the filmmaker sometimes pays for costs associated with rendering those services, including studio time, compensation to engineers, mixers, arrangers and the rental of recording equipment.  Alternatively, these costs may be built into the composer’s fee (see the discussion of the Package Deal below).

The composer’s fee is generally paid in installments.  Part of the fee may be payable upon the signing of the agreement or the commencement of “spotting” – i.e., when the production team and the composer screen the movie to determine where and what type of music should be used in the movie’s score.  Another portion of the fee may be payable upon the commencement of the recording of the score.  A third installment of the fee may be payable upon completion of all services, including delivery of the master recording in a format specified in the contract, and the producer’s acceptance (see below) of the master recording.

The Package Deal

With low budget movies, a producer and a composer often enter into a “package deal.”  The producer pays the composer a fee designed to compensate the composer as well as cover costs associated with the recording of the score.  The composer assumes responsibility for payments to musicians, arrangers, studio time, and instrument rentals, and retains any monies remaining after she pays these costs.

But, if the composer incurs expenses in excess of the package fee deal, the composer assumes the costs of such overages.

There are, however, usually certain excluded costs in the “package deal” which the producer assumes.  These costs include the licensing of any music not written by the composer, or if the producer hires another composer to re-write the score, and any re-scoring or re-recording costs required solely for creative reasons.  The composer should try to limit the right of the producer to demand changes after delivery and to negotiate a “kill fee” in case the producer is dissatisfied with the score (see Producer’s Acceptance” below and Paragraph 2(b) of the second contract analyzed in this article).

Package deals often work well when a composer is using few instruments and relies on synthesizers and her own equipment and recording facilities.

Work for Hire vs. Exclusive License

A key provision in any composer agreement is the section that addresses the ownership rights in the music.  In a typical composer agreement, the producer and the composer agree in a signed writing that the music which the composer creates and records is deemed to be a “work for hire” and that the producer owns all rights including both the underlying music and the recording of that music.

This provision also states that, if for any reason the music created and recorded by the composer is not deemed a “work for hire” under federal copyright law, the parties agree that the composer has transferred all rights in and to the music, as well as the recordings of the music, to the producer.

A work for hire contract gives the producer total control of the music and the recordings. The producer can use or modify the music in any manner, and include the music in the trailers, marketing materials, advertisements and any other form of promotion for the movie.

But, in addition, the producer can act as a music publisher and label by licensing the music and the recordings to any third parties whether or not such third parties have any connection to the movie.  For instance, the producer could license the music and/or the recordings to a person or entity that may want to use it in a commercial or ad campaign.

Although the composer has no say in how the music is used and will not share in the income from licensing of the music to third parties, the composer may be entitled to compensation from at least one income stream, i.e., public performance.  This is the one income stream in which a writer subject to a work for hire agreement usually gets paid.

As discussed in prior articles in this series, the publisher’s share and the songwriter’s share are generally divided on a 50/50 basis.  Although the filmmaker receives the publisher’s share for the music license, the composer retains the songwriter’s share regardless of who owns the rights in and to the music.

Cue Sheets

In the U.S., there is no public performance income from performances of the movie in a theater, and there is no performance income from distribution of DVDs or permanent downloads.  However, there are public performance royalties from broadcasting the movie on TV and from Internet VOD (e.g., Netflix). The composer should be very careful, however, that proper cue sheets are prepared and presented to his or her performance rights organization (“PRO”) to ensure that he or she will be credited by the PRO.  As discussed in A Simple Guide to Signing the Best Sync Deal Possible in this series, a cue sheet is a log of all the music used in a production (here’s an example).

Cue sheets are the primary means by which performing rights organizations track the use of music in films and TV.  Without filing the cue sheet, the composer will not be compensated by the PRO.

Other ‘Work for Hire’ Considerations

Work for hire agreements are standard and usually non-negotiable when a major studio engages  composers.  But major studios generally pay significant fees. A composer who is approached by an independent producer whose offer is more financially modest may be able to retain the rights in her music or at least share in additional income streams besides the writer’s share of public performance royalties.

Also, if a producer cannot afford to pay a composer his or her customary fee, the composer may agree to a reduced fee provided that the composer is permitted to share in the publishing rights, that is the underlying music as opposed to the recordings.  For example, if the composer’s music from the movie is licensed, the composer could negotiate to receive the full 50% (songwriter’s fee) and perhaps one-half of the publisher’s share, or 25%.  In this scenario, the producer would retain the remaining one-half of the publisher’s share (i.e, 25%).

Retaining Your Rights

Since producers are generally not music publishers, and may not have an interest in engaging a music publisher to exploit the music rights on their behalf, a producer may offer a reduced fee to a composer and permit the composer to retain the publishing rights.  In this scenario, the composer usually grants an exclusive license for use of the music in the movie as well as in any trailers, advertisements or other promotional materials for or related to the movie but retains the copyright in his music and recordings, and the right to use them in other projects.

In this case, the producer may also negotiate to secure the right to create and distribute a soundtrack album in connection with the movie. The composer agreement can go into extensive detail in calculating how a composer will be compensated for the use of his or her music and recorded performances on the soundtrack album, or the parties can agree to negotiate such terms in good faith at a later time if and when the possibility of a soundtrack album is more certain, such as when a distributor agrees to commercially release the movie.

If the producer agrees that the composer will retain rights in her music and recordings, the producer will usually require the composer to agree that she cannot use or cause others to use the music in any other movie, television program or other audio-visual project for a certain period of time, except with the producer’s prior written consent.  This period may be several years either from the date of the initial commercial release of the movie or from the signing of the composer agreement.

After the agreed upon period, the composer can place the music in any other movie, television program or audio-visual project, such as a video game.

Other Usage Considerations

The composer’s agreement may also have a provision in which there is a limit to the amount of the movie’s music that may be used in an album. This is to prevent an album containing the composer’s music from becoming potentially competitive with the movie’s soundtrack album, thereby undercutting the marketability and value of the actual soundtrack album. If a composer creates his or her own album and uses any portion of the movie’s music, there will generally also be a requirement to credit the movie as the source of the music.

Producer’s Acceptance

Prior to accepting the final score, the producer usually will retain the right to request certain changes, omissions or additions to the movie’s music.  In addition, the producer generally has the right to not use the composer’s score in the final version of the movie provided that the composer has been fully compensated for creating and/or recording the score.  This is known as a “play or pay” clause, and it is used in a wide variety of different forms of entertainment business agreements such an agreement for an actor’s services.

Play or pay provisions are usually non-negotiable because (i) they are inherently fair because they pre-suppose that the producer has paid one hundred percent of composer’s fee; and (ii) it is overreaching to demand that the producer use the composer’s score if the producer does not think it works for the movie.  However, to increase the likelihood that a composer and producer are on the same page regarding the movie’s music, the two can agree that the composer will provide scoring and recording services for a portion of the score, at which point the producer can decide whether or not to continue to work with the composer on the remainder of the score. If the producer chooses to terminate the relationship, the composer would receive some agreed upon “kill fee,” but the producer will generally retain the right to use the composer’s music and recordings rendered during the trial period.

Credit

Composers should negotiate their credit carefully because a good credit can be vital to getting higher fees for future work.  A composer may request “single card” credit in the main credit sequence of the movie whether the main credit sequence is at the beginning or the end of the movie, meaning that his name and credit is the only name to appear on screen at a given time.  The producer will usually only promise to provide a credit if they actually use the music in the movie.

Single Song Agreements

Acquiring music for movies can take all kinds of forms.  The last agreement that we analyze in this piece is for a single song that was previously written but unreleased.  The filmmaker wanted the composer, who was also a record producer, to record the song so that he could put the recording in a music video that would be shown with the end credits.  Because the producer and composer both knew that the producer wanted to use the composer’s pre-existing song, the composer had a great deal of leverage. As a consequence, the composer was able to negotiate a license rather than a work for hire.

You could easily imagine a situation where the filmmaker wanted the composer to create and record an entirely original song.  In that case the contract would look more like a work for hire.

 

The Contracts

The first contract analyzed below is a standard pro-film producer form of agreement.  It makes all the music a composer creates and records a work for hire for the filmmaker.  It also gives the filmmaker the right to demand that the composer make an unlimited number of changes and revisions in the music without obligating the film producer to pay any additional compensation to the composer.

The second agreement is much more composer-friendly. It is not a work for hire agreement. Instead, the composer merely grants the filmmaker the right to use the music in his movie and retains all other rights, except that the composer agrees not to license the music for another full length film for a period of time.

In addition, the second contract limits the time that the filmmaker can make the composer make changes to two days after the composer delivers the final mix. It also provides for a “kill fee” if the filmmaker decides that the music delivered by the composer is unacceptable.

The last agreement is for the recording of a single song that the composer previously wrote but never recorded. Similar to the second agreement, the composer grants a non-exclusive license to the filmmaker and retains all other rights in the song and the recording. In this case, though, the composer also grants the filmmaker the right to use the recording in a promo video for the movie.

 

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I hope this article makes your movie licensing a far easier process, while giving you far greater options and leverage.

Thanks for reading! Steve.

 

Steven R. Gordon, Esq. (steve@stevegordonlaw.com, www.stevegordonlaw.com) is an entertainment attorney specializing in music, television, film and video. His clients include artists, songwriters, producers, managers, indie labels, music publishers as well as TV and film producers, and digital music entrepreneurs. He provides music and sample clearance services for producers of any kind of project involving music. Mr. Gordon is also the author of The Future of the Music Business (Hal Leonard 4th ed. 2015).

Robert L. Seigel, Esq. (rlsentlaw@aol.com, www.rlsentlaw.com) has more than twenty years experience in the counseling and representation of producers, writers, directors, distribution companies and foreign sales agents concerning development, production, marketing, distribution and exploitation of fiction and non-fiction film, television, publishing and new media projects. His clients’ projects have appeared theatrically and on network, syndicated, public and cable television and have earned Academy Award and Emmy nominations and awards as well as prizes at major film festivals.

The authors gratefully acknowledge the assistance of Ryanne Perio, Esq. in the preparation of this article. Ryanne is an associate at Manatt, Phelps & Phillips, LLP where she focuses on intellectual property litigation. They would also like to thank Clémence Barbet-Gros, a graduate law student at Lyon University, France, and Sonia Hanson, a recent graduate of the University of Minnesota Law School.

Top image: Universal Studios backlot, photographer: ‘Cliff,’ licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0). 

 

 

8 Responses

  1. Remi Swierczek

    Another complicated zone of confused and almost lost music industry!

    TV and movie theaters are perfect branch of discovery based MUSIC STORE!

    Just imagine how many tunes Google and Shazam music PIMPS could sale during global release of music laced blockbuster! Quiet, profitable and un-disruptive to co-viewers salesmanship! $100 million music infusion to billion dollar movie would not be unusual.

    Reply
  2. ErikWGottlieb@gmail.com

    Steve, thank you for publishing the Music Contract descriptions and example contract templates on digitalmusicnews.com. As a creative add to your article, you might consider including monetary numbers for several examples:
    1) Range and average market rate to Composer per song for Custom music compared to Library
    2) Range and average market rate per entire album for Custom music compared to Library
    3) Range and averages showing real world ASCAP or BMI income from a Custom song or album license.
    4) Range and average sale price of music in a work for hire where all rights are given to Movie Producer.
    Understanding these are often project dependent, and even decade dependent, but a range of Low vs High per project type will be of value for a novice Film Composer.

    Reply
  3. Dorene Webster

    This is a really great article with so much information. Thank you!!

    Reply

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