Music is a big part of civilization. Centuries have passed but music endures and grows taller every decade. In fact, the demand for music has increased very steadily in the last 10 years and will continue to increase in the future. That is in line with the amount of income that the music industry currently earns from year to year.
This is an unstoppable force because people are always looking for the next great artist around the corner, thus continuing the cycle and relevance of music. The demand for music content is always high. Global music revenue since the turn of the century has been steady. Currency is measured in billions.
As technology developed, music became more technical, complex, and desirable. Others get credit for using music they don’t own. Today, independent musicians are very aware of protecting their work for legal purposes. Through music licensing, you can ensure that your assets/works are legally protected.
What is a music license? A music license is a license used for copyrighted music. This allows the music owner to retain the copyright of the original work. It also ensures that the owner of the piece of music is compensated if their music is used by someone else. Music licensing companies have limited rights to use the work without a separate agreement. In music licensing, you can license your work in the form of music, composition, and songwriting.
During the music licensing process, there are terms that will be discussed by the groups involved. If you are an independent musician, you will be the licensor. You are the person responsible for the music you make, so you are the copyright owner of the licensed work.
The licensee will become the music licensing company as they will distribute your work to other industries. They will also collect royalty fees to redistribute it to you if your music is included in live shows, TV shows, commercials, campaigns, video games, etc.
There are also two types of contracts in music licensing, namely exclusive contracts and non-exclusive contracts. An exclusive contract means that your work is licensed exclusively to one music licensing company. Only one company has the authority to distribute and market your work.
If you sign an exclusive contract for your song or album, you cannot use the same music content and have it signed by another music licensing company. This agreement is exclusive and confidential to the licensor and licensee.
A non-exclusive contract allows a second party to distribute your work and does not prevent licensors from selling their music to music companies or other licensees. Independent musicians can sign non-exclusive contracts to multiple companies that use the same musical content.
Non-exclusive contracts are generally used to prevent someone from being locked into a limited contract before their work gains popularity. This type of contract is designed to protect music artists from being taken advantage of at the early stages of their respective careers while in the process of releasing their music to a larger audience.
There are also cases involving direct payments for used music content. This is called Sync Fee. A sync fee is a license granted by a music copyright holder to allow the licensee to sync music with visual media such as advertisements, movies, TV shows, movie trailers, video games, etc. For example, a video producer desperately needs music content for a particular project and has limited time to find it.
In this case, the artist and music licensing company will be contacted directly for possible use of the original work and negotiate the upfront payment involved. Synchronization costs can range from a few dollars to several hundred dollars or up to thousands. Payouts usually depend on how big and well established a company is. If it’s a well-known company, there’s a chance the synchronization fee will skyrocket in value.
We need to understand that today’s businesses pay a high price for music at a high price. The entry and revenue generated across multiple industries is worth billions of dollars and music artists who get their music licenses will get a big share of the money. Music content is very important. Every company needs visual and audio content. You can’t do commercials, shows and movies without any music content.
Music licenses carry compensation for assets used. This is called a royalty fee. A royalty fee is a payment that one party collects from another for the continued use of the copyrighted asset. You can get compensated if your work is shown at a live public show. For each direct use of your music, you are compensated because you own the copyright to your work.
The American Society of Composers, Authors and Publishers (ASCAP) has raised more than $941 million dollars in licensing fees and distributed $827.7 million dollars in royalties to its members in 2014. BMI on the other hand, collected more than $1.013 billion dollars in fees. licenses and distributed more than $877 million dollars in royalties to its members during 2015.
Music licensing is a modern way to make money through music. In recent years, physical sales have dropped. Music streaming has taken over as it is more convenient and practical with the help of the World Wide Web. With streaming sales increasing, the numbers that can be collected as royalty fees could soar in the years to come.
In fact, as the Australian financial review website states, streaming generated $2.5 billion dollars in US music sales last year, overtaking digital downloads as the music industry’s biggest source of revenue. As shown in the figure below, global music streaming is projected to achieve higher revenue levels in the coming years.
The Internet contributed greatly to the rise of music licensing and streaming. 20 years ago, music distribution wasn’t this big. Television shows and filmmakers are the top two industries that need music content. Today, there are more and more TV shows, movies, commercials, movies, commercials, and many video games that require musical content. It is safe to say that the internet opened the public’s eyes to the opportunities involved behind it.
One of the most visited sites in the world is YouTube. People use, duplicate, rework, copy, revise, and perform music from artists around the world. It also has an influx of ads containing music content. To track all this data, YouTube has a Content ID System. If your music is licensed, you can contact this site and they will look at their data and see if your work is being used by other parties.
As a licensor, you have the authority to take actions such as mute audio that matches your music, block entire videos from being viewed, track video view statistics, or monetize videos by running ads against them. Every country has different rules about it. But YouTube runs a lot of ads and the job of making money from this site is quite possible.
If you are an independent musician, you will have to step up and instill professionalism in your craft to stand your chance of being signed by a music licensing company. With billions of dollars in revenue involved today, you want at least a piece of cake. Monetizing your passion is never easy, but taking the necessary steps to make it work is a must to achieve success.