Licensing Companies – What to look for and what to avoid
This past week, I had a number of artists ask me about potential music licensing deals that they had on the table. The common concern was whether or not the deal they were being offered was legit. This is something that could be discussed in great detail on a case by case basis, but I thought I would give a few brief bullet points on some things to considerbefore getting involved with a licensing company.
Are they a licensing company or a music library? – The lines can be a bit blurry here, but a general distinction between the two is that a licensing company will pitch individual tracks, where a music library might supply clients with a searchable hard drive of music with thousands of tracks. In general, a licensing company will get higher fees.
What rights are they asking for? – At a minimum, you have to grant a licensing company the right to represent your music, but there can be varying levels of artist involvement for each placement they negotiate. Some contracts are pre-cleared(Meaning they don’t have to get the artist to sign off on each individual placement), and others give the artist the right of refusal before the deal goes through. Most indie artist will encounter pre-cleared contracts. Another thing to look for is if it’s exclusive or non-exclusive.
What type of placements do they typically get? – All licensing companies are not created equally. Most of them have areas of strength and weakness, so one company may be really strong on network TV, but not as great at getting songs placed in film trailers. Another company may specialize in getting music into video games. One thing to watch out for are companies that do a lot of bulk licensing deals that return little money to the artists they represent
What percentage do they take? – Fees can range between 20%-50% of the gross licensing fee, but it’s important to keep that in perspective. A small company that gets a high number of placements for you might be worth the 50% fee.
*Things to Avoid*
Don’t work with a company that asks for an upfront fee – They should make their money off of getting songs placed, not by getting you to sign up more songs
Don’t grant them mechanical rights – Some licensing companies will slip some language into the contract that allows them to release your music in album form and make money off of it. A standard sync license contract is pretty straight forward, but granting mechanical rights ventures into record company territory which is far more complex. This should be avoided at all cost.
Don’t permanently sign over any rights to the song – That would be more of a publishing deal, which can be beneficial, but it’s important to make a distinction between a publishing deal and a sync licensing representation deal.