Music Licensing: The Art of the Deal

June 1, 2015

As you’ve seen in the A2IM newsletter and in other outlets, many digital services claim that all sound recording owners receive similar terms in licensing deals. Based on what has been made publicly available in the press, however, the fact remains that while it’s plausible that everyone receives roughly the same base royalty rate, there are also non-rate compensation deal terms which can be a bigger percentage of the overall net compensation than simply the streaming or download rate.

Licensing-deal compensation can take many forms including:

-Base royalty rate per stream or download percentage
-Listener hour royalty streaming guarantees / income not attributable to specific artists’ tracks or specific distributed labels.
-Advances/annual guarantees which result in breakage (see our previous item on breakage).
-Volume incentive bonuses.
-Equity stakes in the digital services.
-Advertising/promotional carve-outs.

…to name just some of the typical ones. Please know that there are a number of services that do treat Indie music labels fairly and equitably, but some do not.

If you’d like to discuss generic deal structures, please feel free to reach out to us at A2IM.

In the meantime, A2IM understands that each music label must determine for themselves their own promotional and commerce plans and that we respect our member labels’ independent entrepreneurial spirit. We simply suggest to our members that before agreeing to any direct licenses, that they should please consider all factors and their effects on their music label’s results, now and in the future, and make an educated decision. In accordance with the entrepreneurial spirit of our members who run their businesses, each of our members should continue to do what is in their business’s best interests knowing, whatever decision or statements they make, that every A2IM label member will always continue to get full A2IM support and benefits.


TAGS: breakage Digital Licensing music licensing