Ethical Music Contracts Pt III:
Important Contract Terms List
***Note: I am not a business, music law, or otherwise industry expert. Should you choose to follow the ideas presented in this article, you are doing so of your own accord and agreeing that I am not legally liable for any consequences of this decision. This article series is only meant to serve as an example of the kinds of situations a young composer may face in the field of music business.***
Types of Contracts
Licensing Agreement — Party A allows Party B to use their music. Party A maintains ownership of music.
Licensing Fee — The sum of money that Party B agrees to pay to Party A in order to use Party A’s music.
Licensing Contract — The contract including the legally binding Licensing Agreement. This may or may not involve a Licensing Fee.
Work-For-Hire — Party A allows Party B to use their music. Party B now owns the music that Party A wrote.
Direct License/ Source License -
Direct License — According to ASCAP, “A direct license is any license agreement between an ASCAP member and a music user (for example a radio station, TV network, website, live venue, or background music service) granting the user rights to perform publicly the member’s music.” *
Source License — According to ASCAP, “A source license is any license agreement between an ASCAP member and an entity that produces or supplies programs containing your music (for example a TV production company) granting the rights to authorize others (for example, a TV station) to perform publicly the member’s music.” *
*A Direct License or Source License involves giving ownership of one’s music away. If you give away ownership of your music, your PRO cannot collect royalties on your behalf. A recent infamous example of pressure to use Direct or Source Licenses involves the Discovery Network. My open letter to other starving composers before Discovery walked back on this pressure can be found here.
Deal Memo — A kind of agreement sometimes used by composers. This establishes that a composer will be working on a project and sorts out some things like ownership and a timetable, while agreeing to negotiate a full contract in good faith at a later date.
Types of Income
Up-Front-Fee — The money paid immediately to Party A by Party B. Also called Primary Income or Primary Compensation.
Back-End Income/Secondary Fees — Money paid to Party A by Party B from the money that the project makes. This can take the form of a flat fee or percentages. Typically only once a project makes a certain amount of money (specified by contract).
Royalties — Money collected from the station/ channel/ venue/ platform where a project airs. This is collected by a PRO and distributed to the people who hold the Writer’s Share and Producer’s Share of Royalties.
Writer’s Share — 50% of the Royalties. Divided amongst all people who wrote the music and lyrics.
Producer’s Share — 50% of Royalties. Divided amongst all people who produced the music or project. *If a contract has a low upfront fee, this can be retained by the composer as compensation*
PRO — Performance Rights Organization — An organization that collects royalties for all member Composers, Producers, Songwriters, etc. The most common PROs in the US are ASCAP, BMI, and SESAC.
Blanket Fee/Blanket License — A Blanket License allows an entity access to the entire repertoire represented by a PRO. A Blanket Fee is the amount of money paid for this license. Royalties are distributed to members from this money based on how many times an entity makes use of their music during the Blanket License period.
Cue Sheet — A form submitted to a PRO so the PRO knows how to correctly distribute royalties. These are submitted for each cue. They may be done by a variety of people depending on what is specified by the contract.
Parts of Contracts
Mastering Rights — Ownership of the records of the music.
Contract Lengths — Contracts will typically specify how long they remain binding for. This may be a set amount of years (ie. 5 or 10) or In Perpetuity (forever).
Disbursement — The method and schedule by which payment is sent and received.
Synchronization — Putting music to picture or into a game. Contracts typically cover Synchronization Rights in some form.
Right of First Refusal/Sequel Rights — A clause in some Composer’s contracts establishing their rights to be the first composer requested in future related projects. This can involve either direct sequels only or all derivative works. Some clauses may specify a fee by which the rights may be bought out.
For further reading on the subject, please visit these websites: