Hi everyone! I’m Aaron Saloman, co-creator of the stock music audio course here on HowToLicenseYourMusic.com.
I was reading Aaron D.’s e-mail newsletter yesterday about the definition of “royalty free” music, and it reminded me that I’ve been meaning to write this guest blog! As he mentioned, there’s a lot of confusion about the terms used in music licensing, and for good reason: they’re confusing.
I’ve noticed a bit of an alarming trend over the past couple years, where some new (and even old) entrants to the stock music world are taking advantage of the confusion among both composers and their clients. New composers, not yet having built up a few TV placements, sometimes don’t realize how significant PRO royalties can be to their bottom line. (For anyone starting out, PRO royalties refers to the money from ASCAP or BMI if you’re in the US, SOCAN for me in Canada, PRS in the UK, and so on depending on your home country.) New media professionals often don’t realize that they’re not the ones on the hook for the PRO royalties – the broadcasters pay, not the media producers. They see talk about PROs, cue sheets, and royalties, and get scared off. “I thought this was a royalty free library!” Like Aaron D. said, the adoption of the term “royalty free” is a bit misleading, since it doesn’t refer to all possible royalties, only the “needle drop” model of licensing. It probably would have been better if stock music libraries had chosen a less snappy, more accurate term back in the day, but I guess we can’t turn that ship around now.
Building on the ambiguity of “royalty free”, a few libraries are now attempting to offer truly “royalty free” music. That’s right: no PRO royalties. Sometimes this will come disguised in the rather innocuous term “direct license”. Other libraries call it what it is: “PRO free”. Still others make vague claims about “simplifying and streamlining the licensing experience”, “innovative new business models”, and so on. In short, you really have to read the contract to be sure you know what’s happening. Whenever I’m establishing a relationship with a new library these days, I ask three questions upfront:
- Do you re-title tracks to collect publishing non-exclusively?
- Do you enroll tracks in Content ID, AdShare, or any similar audio fingerprinting services?
- Do you offer “direct licenses” or ask composers that their music be PRO-free?
Assuming we’re talking about non-exclusive “stock” music libraries, here are the correct answers:
- Yes. (Unless they don’t collect publishing at all, in which case re-titles aren’t needed.)
Any different answers lead to further conversation and negotiation (always friendly – remember, these are business relationships). If we can’t negotiate the combination of answers I listed above, then I politely bow out.
As I’ve interacted with more and more musicians looking to license their music, I find I’m delving into a whole bunch of other fields. So bear with me while we go through a little economics here. Don’t worry, it will be 101-level, and if you make it to the end, I’ll show you a funny twitter account. Here we go:
I’ll share a little personal information with you to illustrate my point. I just logged into my SOCAN account and went back through my statements to my first really good one, in February, 2011. Two placements on that statement stood out. One, on an addiction-themed reality show called “Gone Too Far”, yielded $403.19. The other, a show that ran for a few seasons called “The TO Show”, paid out $329.12. The others were a mixture of “Teen Cribs” and “American Pickers” placements, and some unidentified performances from South Korea. This statement was my first taste of what was to come, as my catalogue started proliferating into thousands of episodes and hundreds of shows, many being re-run and syndicated around the world. If a single track playing on a single show in the background for a few seconds can generate royalties like that, imagine what a track can do over your lifetime?
So if I’m going to sell a “direct license” that will cost me my royalties for even a single placement, I need to be thinking in terms of a synch fee that will replace the lost revenue. What will a track earn in royalties over its lifetime? $500? $5000? $50 000? More? It’s tough to say for sure, but I know at this point that even some of my worst-performing cues have earned $1000+ in royalties, and they’ve only been in play for a few years.
As we talk about in the course, my PRO royalties have been more lucrative than the upfront sales of stock music, sometimes by a factor of 10. We’re not talking about elite exclusive libraries or publishers that score five to six-digit synch fees. We’re talking about huge production music collections where your share could range from about $10 - $100 per sale. Sometimes with large blanket licenses, the composer ends up with pennies. Removing the PRO royalties from this equation removes the main incentive to participate in large libraries. Try to think a bit like a businessperson – as we’re offering more value and taking on more risk (exclusivity, foregoing our PRO royalties, etc), our price has to go up. In situations where little effort or risk is required on our part (such as non-exclusive libraries providing our entire catalogues to reality shows mostly for PRO money), we can do things more cheaply. This is why film synchs go for so high a price – the US is the only country that doesn’t pay PRO royalties on film music, so the initial fee rose exponentially to compensate for the lost broadcast revenue.
OK, you’ve come this far. Here’s a funny example of another problem with the PRO-free model, taken from the satirical Twitter account @Fauxmusicsupe:
Did you catch that? This scenario should be pretty obvious to anyone who understands even a little bit about how PROs work. The money isn’t charged as a per-track fee when someone buys a track administered by a PRO – of course not! That would be a clear disincentive for people to use PRO-administered music, and the system probably wouldn’t work. Instead, a broadcaster pays a blanket license to the PROs, and then is allowed to broadcast essentially any music in the world. A cue sheet is filed listing the music used, and the PRO divides up the blanket license money based on who is owed. Since the money has already been paid to ASCAP, BMI, SOCAN, etc, it will just sit in a bank account if all the music that gets licensed starts being PRO-free. What’s to stop an unscrupulous person from registering these “PRO-free” tracks to themselves and getting a little bonus? It’s certainly not ethical or even legal, but if you think those kinds of things don’t happen in the music business then I’ve got a nice outdoor fridge to sell you that only works in the Montréal winter.
I’m hopeful that artists are smart enough to push back against PRO-free. There’s really no other place to go after that revenue is eliminated, and it would be a shame to realize it too late. Thankfully, I’m seeing lots of discussion on Facebook and Twitter about this issue, and it seems composers are realizing what it means. So good job composers! Sometimes you wonder what it will take for a musician to say “no” to something…..this could be it.
It’s not all bad news in stock music land! Remember in my last post how I was hinting about a solution to the Content ID problem? Well, Seattle-based music library Audiosocket has announced an in-house technology they developed that seems to address the major issues. Here’s a look https://www.audiosocket.com/technology/license-id. If it does what it says, then I hope the major online platforms will sign on, and other libraries will start using it as well!
That’s all for now. Don’t , if you’re looking for an in-depth intro to the world of stock music, check out our course “How to Make Money With Stock Music Libraries” . Feel free to get in touch with me if you have any questions!
In : June 2014
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