Publishing beat license

Published on December 20th, 2011 | by Hugh Hession

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Understanding the business of beat licensing

Online beat licensing has become quite popular within the last few years. Sites like Soundclick, mybeatshop, Beats Planet and a ton of others are paving a way for emerging music producers to get their beats heard while giving both aspiring and major league music artists the audio tracks necessary to lay down their raps, song lyrics and/or hooks.

Although the licensing of beats is nothing new, the agreements that accompany them can be both intimidating and confusing for you as a music artist. That is why I decided to write on this very subject and give you some insight on the process of what beat licensing is all about.

What is a beat?

A “beat” is really a generic term for what I define as the “skeleton” of a potential song. It typically contains a drum loop pattern, maybe some synth bass and other synth textures. Some beats include hooks – which are usually the equivalent of a chorus. Many online beat sites use female vocalists on these types of tracks. An example of how hooks can be used effectively with beats, can be heard in Eminem’s Love the Way You Lie featuring Rihanna (just gonna stand there and watch me burn…) Bottom line, is that beats provide the structure to create a song in which a music artist can make their own.

Basic agreement terminology

First of all, let’s get down to the basics – the terms you should be familiar with when you enter into these agreements.

You, as an interested party who wants to buy a beat, is known as the licensee or sometimes just simply called the buyer. The entity selling the beat (typically a producer) is the licensor. Easy enough, right?  Let’s move on.

There are typically two types of licenses offered. The first (and most popular) is the non-exclusive. The other (can you guess?), is the exclusive license. Some sites offer other types of “sub-licenses” within the non-exclusive such as premium or standard. All of these have different provisions that are attached to each license and which spell out the terms that are set forth (basically, the stuff that tells you what you can and can’t do with the beat).

Non-Exclusive vs. Exclusive

So now that we’ve covered the types of licenses, what exactly do they contain? Although all agreements are different, there are a lot of similarities. Here they are, broken down by each license.

Non-Exclusive license:

Non-exclusive licenses give you the rights to use the master recording beat (say in .wav or .mp3 format) to create a song with your lyrics, raps, choruses or whatever. Understand that the producer or whoever wrote the song, still retains copyright ownership of the beat. You also need to know that the licensor has the right to license the beat to whomever he wants to until the beat is purchased exclusively.

HOWEVER, understand that when you record your lyrics, choruses etc., you now have created a derivative work of the song. This is usually not entirely clear in the majority of agreements. Basically what this means to you as the artist, is that you own the copyright of the work that you completed on the beat you licensed – but you don’t have any copyright claims to the original music contained on that beat. As a newly created derivative, the song you’ve just developed with the beat you licensed, is a new work.

Some beat websites place limitations on how many derivatives you can use. For instance, if you are given permission for one derivative (such as recording lyrics/vocal track), then you may not be able to record any other derivative material without another license. It’s their prerogative.

Usually, non-exclusive licenses have limits on how many units you can sell as well, such as 2000 copies. If you have higher ambitions, and think you’re going to sell more, you may want to go with an exclusive.

Exclusive license:

If you are serious about a certain beat and want to retain ownership of the sound recording, then it’s probably a good idea to get an exclusive license. This normally gives you complete control over what you do with the master recording. Now, you can add as many derivative recordings as you wish (add a new synth part, create a pre-chorus or whatever you want to do). You also usually get unlimited rights to sell as many copies as you wish.

You need to know that producers differ on how they define exclusive and just because you have exclusive rights to the master doesn’t give you exclusivity to the composition. Often, if you had the opportunity to say, use the song in an audio/visual aspect, then you would have to negotiate a synchronization license with the original writers as well.

Also, licensors sometimes will not let you re-sell or license the master to another entity, such as a record company or another producer. And finally, most will want to get credit for their work.

Master vs. Composition: The confusion sets in!

What I find in a good number of these beat agreements is the lack of separation between the master recording (the sound recording or SR) and the composition (the actual song itself). These are two distinct issues that often create the most ambiguity within beat agreements. The reason, is that both composition and master use rights are blended into one, making it tough to comprehend which is which.

For instance, some producers will refer to the master and the composition as the “song” in their exclusive agreements, when in essence, they are referring to the master. Remember, the song (the composition) and the master (the sound recording) are separate.

So what is outlined in most agreements are a combination of the SR and composition. Such provisions include the writers percentages, synchronization limits based on additional licenses, performing rights registration requirements and of course, indemnification which prevents them from liability.

Negotiating the license

Always remember that everything is negotiable. It’s definitely possible to customize agreements, however you should have full understanding of what you are are asking for. For instance, it is possible to negotiate an exclusive agreement that places limits on some of the rights that the licensor has over the master.

Something else to know. When it comes to licenses, beat sites seem to have a tradition of wanting payment first, then they will send you the agreement. This is an uneasy feeling if you are wanting an exclusive license and the producer is asking for a considerable amount.

Always ask for the agreements first, so you can see what is in them. Often, you can view them on the particular beat website you are on within their FAQ area. Mybeatshop has a decent Terms of Service link that outlines their policies on licensing.

If you want to customize the agreement, do that first, and get a buy-in from the producer or licensor before you proceed. Once they commit (always best to use email for a paper trail), then submit payment. If you’re truly wanting to negotiate terms and you are serious about obtaining exclusivity to a certain beat, you may want to secure the services of an entertainment lawyer to help out.

Much of the time, customized deals are never mentioned, as the agreements these beat sites have are all “standard” (really, there is no such thing as “standard” in the legal world). They send you these agreements automatically after payment is made, without any signatures. When you submit payment and they give you access to the beat for download, that creates what is called “consideration” in a contract between you and the licensor.

The bottom line

Choosing which license to obtain depends on what you are trying to achieve. The licensor or producer is going to keep licensing the beat as a non-exclusive until someone ends up getting an exclusive, in which at that point, it will no longer be available. So, if you want to take “ownership” of the beat by developing your own song around it, then the best thing to do, is go exclusive. After all, there may be a lot of others out there already who have permission to the non-exclusive. It may cheapen your brand as an artist if more people come out with the same beat with another derivative.

Like anything on the internet, there is some crazy and inaccurate information floating around on the subject of beat licensing, but in all fairness, there is some good stuff too. As a music artist, I recommend that you study up on copyright law and general licensing points to command a greater understanding of what it’s all about. Knowledge is power.

Happy beat hunting!

PS: For more reading, check out Royalty Free Music – Licensing and Copyright, by attorney Patrick Curley – legal advisor to premiumbeat.com.

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About the Author

owns and operates Emerging Artists Entertainment Marketing & Consulting, LLC - a company devoted to cultivating aspiring music artists, He is also the head of Hession Entertainment Group, LLC (artist management) and the Music Industry Liaison for the artist discovery site, TalentWatch (www.talentwatch.net). He has over 25 years experience in the music business as a performer, composer, producer and artist manager. Hugh holds a BA in Marketing and is a professional member of NARIP and a voting member of The Recording Academy. He often speaks at seminars and workshops on artist development.



19 Responses to Understanding the business of beat licensing

  1. Isaac says:

    I am going to say that this was THE BEST break down of beat licensing I have read. This article really sheds light on the ins and outs of how to properly purchase or sell a beat. If you are an artist you cant afford not to read this!

    • Hugh Hession says:

      Isaac –
      Thanks for the support! I’ve been through the process a few times and I felt that it was worthy of a blog post because it can often be a misunderstood area. Glad you enjoyed it, and by all means, share it with others!

      Hugh

  2. Jwallace says:

    If a beat was licensed and used in a new recording ( a vocal rap or melody added in the new recording) would the beat owner become a co writer on the new recording and share in the new SR copyright?

    • Hugh Hession says:

      From my experience, the biggest issue with beat licensing, is the ambiguity of agreements due to lack of knowledge concerning copyright law from the licensor. The problem often arises when there is no separation between the SR and the composition. These are two distinct copyrights. Unfortunately, many agreements lump them into the same category.

      Additionally, adding your rap or melody to a beat creates a derivative work, but it is only valid if you get permission to do so. Where the confusion comes into play, is when agreements make mention to how the licensee can commercially sell up to a certain amount (say 5,000 copies) and has to register with their respective PRO. However, a few lines later, the licensor claims all rights to copyrights without any permission to make a derivative work. This doesn’t add up and is one example of how some these agreements can be ambiguous.

      My suggestion is if you are seriously interested in using beats for songs, contact the seller or licensor and negotiate all the details. But be forewarned – it’s not always an easy process. I’ve negotiated exclusive beats for clients and involved my attorney who revamped the agreements for something that made legal sense. Exclusives ultimately give you more control over the SR, but above and beyond that, should give you complete ownership of it.

      At the very least, you need to make sure that any licensing agreement (whether it is for an exclusive or non-exclusive) clearly gives you the right to add your lyrics, raps or melodies and take part in the copyright as a derivative work.

      Thanks for stopping by!

  3. Kyle says:

    Can the licensor still collect royalties on licensed beats (non-exclusively or exclusively) without having to charge the licensee any royalties beyond the original licensing fee (like royalty free)? Is this done by reporting the “derivative” to the licensor’s PRO?

    Thank you for your attention.

    • Hugh Hession says:

      Hi Kyle. Licensors typically still own the beats, whether exclusive or non-exclusive. So if your question is, can the licensor collect more money from you, for the beat or beats you initially secured a license for, that depends upon the agreement. If you went over the required song releases (some only allow a certain amount to be distributed), then you may have to pay extra.

      Royalties are collected in various ways depending how the contracts/agreements are worded. As I mentioned previously, many of them only give you the right to release so many copies of a song you make as a derivative (often, in the case of a non-exclusive). While exclusives may be unlimited, the original author (the beat maker), is still a writer. You may own the sound recording, but not the composition. In this case, they are still legally entitled to get both mechanicals, licensing and PRO royalties. But, those don’t come out of your own pocket, but rather a third party. Then, there is the issue of ambiguity which I outline in this post, about sound recordings and the composition. I find a good deal many agreements cloud this issue. I recommend finding a knowledgeable entertainment attorney to help you out.

  4. Jack Ramos says:

    i got an email from a label who wants to use my track(s) on a compilation,
    and i agreed

    he sent me a
    NON-EXCLUSIVE MASTER LICENSE
    and the contract
    can i send you the contract?
    i am a little confused about it.

    thank you

  5. Colin says:

    I made a “beat” for someone and they made a hit song out of it. Now they are getting their “master” sync licensed. I’m wondering what % the producer (me) usually gets from that deal. I have heard as much as 50%. Also when I made this beat I used a sample, the sample has been cleared, they paid Universal and that’s all cleared. So I basically took samples, chopped em up, added drums, a chorus hook with a guitar. And then they sang over it. This song has over 100,000 hits on YouTube so I know it’s going good on that part.
    Thanks for your time. Cheers!

    • Hugh Hession says:

      Hi Colin. Thanks for your question and my apologies for the long delay in answering. 2014 has been a busy year for my management company and unfortunately, has taken me away quite a bit from Making it in Music. Hoping to change that come 2015!

      Without seeing any initial agreement or being privy to any verbal agreement, this is almost impossible to determine. If you made the beat and recorded it yourself, then you in fact, owned the sound recording of that beat (the master). If the artist used your original recording and the artist merely recorded vocals on top of it, that’s your master! You should have ownership of that. Now, if they completely re-recorded it, than unless it was previously released, you have first rights as the composer and they needed to obtain your permission to record. But that doesn’t sound like the case here. It sounds like you gave them permission to use your recording, and in turn, the artist recorded his or her vocals over it.

      Another issue here in regard to composition, is that if the artist wrote lyrics and sang on top of it (creating the melody lines, chorus etc), then the song is now a derivative work and the song would now be owned by both you and the writer. So, you should definitely have ownership. In regard to producer points…that’s up to you. But again, if nothing was negotiated up front, you may not get anything. It’s customary for a producer in hip hop or even R&B usually to get a much larger royalty percentage than other genres of music.

      Again…all comes down to agreements. Always get the agreements, licensing agreements, producer royalties etc out of the way first! As they say, it’s just business, nothing personal.

      Thanks!
      Hugh

  6. Mc Dean says:

    Greetings, thank you for this amazing page full of great information for artist and beatmaker. I am myself a beatmaker/composer and I make songs for artists. One time, I made a full song for one artist, ( beat, composition, recording her voice, mixing and mastering ). She paid in all around 500$ . Few weeks later, she tells me the song will be part of a movie for a specific scene and also to become the main soundtrack of the movie. But she didn’t told me anything about that before we work together as she thought It didn’t matter, Now, the movie is not a “super big” block buster coming out but mainly an independent movie but still… my question is, can I request to re-negotiate a new contract deal with her although she already paid or is it too late? ( royalties , etc ) And also, is it worth it since it’s not a big movie? Thanks!

    • Hugh Hession says:

      Hey Mc Dean. Thanks for the question. My apologies for the delayed response. 2014 has been a busy year for me on the side of artist management and unfortunately, Making it in Music has not been as active as years past. That will change however in 2015!

      What kind of initial agreement did you have (verbal or non-verbal)? Sounds to me like she paid for a “work for hire,” which gives her full rights. It’s a grey area, unfortunately, if no written agreement was put into place :) Of course, you could approach her to try and negotiate something, but again, hard to say without a clear understanding of what your initial agreement was up front at the time you composed and recorded the song.

      Hit me up with more details if you additional help. Thanks for contacting me.

      Here’s to a productive and profitable 2015!
      Hugh

  7. Andrew Lolis says:

    I’m in the process of setting up my own business. I am unclear whether or not it is ESSENTIAL to have a lawyer/attorney write up the licenses. I understand I need them however is there a possibility to write up the licenses myself?

    • Hugh Hession says:

      Hi Andrew. My apologies for getting back to you so late. Much of 2014 has been devoted to my artist management and consulting companies. I do plan on getting back to Making it in Music come 2015 with more content!

      In terms of “licenses,” I’m assuming beat licenses. I would definitely have an attorney either review or draft an agreement. I say this, because the beat making industry as a whole often have very ambiguous agreements. Hit me up if you need help. I negotiate licenses all the time and understand the complexities involved.

      Thanks! Here’s to a profitable 2015!
      Hugh

  8. Terrence says:

    How are you? My question is, When a beat is sold exclusively, who owns the copyright to the song? Also, when you speak of “SR” and “composition” do you mean SR as in: Whatever the person puts on the beat that the producer sold to them and composition as in: the beat the producer made?

    • Hugh Hession says:

      Hi Terrance. Great question. This is an ongoing issue with a good many of the beat agreements out there. This is a question that requires some explanation, as it’s not so cut and dry. The “SR” is the sound recording. This is literally just as it says – the “recording” of the song, regardless of who “wrote” it. When we speak of who “wrote” the song – the writer (or writers) – that is the composition.

      Often, there is a good deal of ambiguity in beat agreements between separating the rights in the sound recording and the rights to the composition. To make it even more unclear – there is rarely any language in an agreement that makes reference to the derivative work that is created once the licensee (the buyer), creates lyrics, raps and melodies and re-records; which is technically (and legally) a new sound recording. Often, beat makers will require the buyer to reference the copyright year and their production company as the sole owner of the sound recording. This is not so cut and dry, mainly because the buyer has created an entirely new sound recording. And although the original beat maker may be “one” of the producers who should rightfully be mentioned, there may be other producers as well. And, if it’s a new sound recording, than he would not solely own it. Another issue is the composition. If the buyer writes new content (lyrics, melodies etc.), it’s literally a derivative work and accordingly a “derivative” composition. Basically, this is a new song!

      There are some incredibly talented beat makers out there. But, business is business. I’ve successfully negotiated many exclusive beat agreements mainly because the original agreement from the beat maker is often not clear both in terminology and ownership. It’s truly a win-win, because both sides are protected. A good many “boiler plate” beat agreements that accompany the purchase of a beat wouldn’t hold up in court. If you want further consultation, please contact me!

      Thanks for your question.
      Hugh

  9. Iggy says:

    Hi there,

    first off , thanks for all this information , it’s appreciated over here.

    Now my question :

    What happens if a beat is ” sold ” first as a non-exclusive and then someone buys the exclusice license for it ? I mean , what happens with all the the non-exclusive owners after the beat has gone exclusive ? can they still use it ?

    Thanks

    • Hugh Hession says:

      Hi! Thanks for stopping by. Typically, non-exclusive licensees are allowed to use the beat after an exclusive license has been issued provided they purchased the beat prior to the issue of the exclusive license. So, in short, yes, they are allowed to normally use it, unless you negotiate otherwise with the licensor.

      Best Regards-
      Hugh

  10. Mc Dean says:

    Hello Hugh! Thank you for taking your time to reply back to me up above! I am happy you “do” take the time to read our post hehe. Not everyone does that. You make me want to hire you now as a personal lawyer for all my deals!

    Ok, to clarify my question before, it was a “verbal” agreement that if she pays 500 $, she can do whataver she wants with it. ( I shouldnt of said that haha! ) There was no contract sign between me and her because she was my friend as well… so.. I wasn’t too much kean to make her sign a contract because sometimes, they get scared and I get no money at the end haha!.

    I live in Canada by the way so I am not sure if “work for hire” is the same regulations as in usa…

    Hmmm, I will get a little more serious now. I have received “very recently” a contract offer from a “about to be reknown” artist here where I live… they are dealing with high end artist around the world. Now, this manager comes to me and asked me for my price as to compose a brand new beat for her singer ( who is not reknown yet but might be considering the big names that are collaborating with her as we speak ) …now this is the sad part… I offer a 300$ fee as I did not know how big this was…. He counter offered me to collaborate with him ( so I won’t pay anything to him and still make a brand new beat ) then he would allow me to be gain “shares” of profit from everything. 13% I believe he said… on shows….sales… etc..that is “IF” they succeed in making it big within “one year” otherwise the contract would be cancelled and no one gets paid… SO… I declined the offer. I offer him to pay 300$ cash upfront and also I would keep my SR and Composition rights.

    He said no, he wants to pay 300$ AND own my composition rights and SR… I was like… seriously? p_p

    So, I told him…forget it. Forget everything.

    My question is, when I charge someone lets say 300$ or 500$ or whaveter price. Am I allowed let say… to charge him a higher price IF they are big in the music industry? I mean, if Rihanna manager was to approach me to make a beat… how much should I charge? 500$ 5000$ 15 000$ ? You see, I don’t really know how much to charge….what should I base myself onto before I make a price and what would YOU do if you were me? Would you take the collaborating option ( that included that id they don’t make it big no one gets paid at the end )….or would you charge them like… super expensive price like I don’t know… 15 k ? I heard Neptunes charge a lot of money since they are big in the music industry already… but me… I can do the same thing… but … am I allowed to charge alot like them? What do you think?

    Basically, if you were me, would you ask for a “cashdown” first along with a contract to gain a percentage of the profit at a certain extend? Or would you just charge them a specific amount and give away all your exclusive rights?

    Also, if I charge let’s say 300$ for a beat that I compose for them ( brand new beat, not a lease ) is it automatically an “exclusive beat? Or can I tell the buyer that I will charge him or her 300$ AND I will retain 100% of all rights on composition and SR? And am I obliged to sign a contract at this moment or can it be just verbal agreement?

    Most of my clients, I make them pay a cashdown for any any beat or composition I make for them, and I tell them that I retain my rights as composer and SR. I guess that is fair right?

    Some people disagree… thinking that I want too much…. well… my answer to them is that, if I were to sell them my composition rights, it would cost them 100 times more since they can make millions of dollars with my creation. So even if I were to sell them my SR and composition rights for 15 000$…. I would still be the loser at the end if they make it big with my beats.

    What do you think? haha! Sorry If I write alot.

    Lastly, If I recieve an important from an important name in the industry, how much would you charge to be my lawyer in all this? Let’s say for validating a contract I am being offered. This would be on a very “big” offer occasion of course. Thanks in advance!!

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