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.)
- No.
- No.
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:
https://twitter.com/FauxMusicSupe/status/449331770060595200
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 forget, 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!
Visit http://www.howtolicenseyourmusic.com/blog/stock-music-report-pro-free- for more.
Aaron Saloman
http://www.twitter.com/aaronsaloman
http://www.facebook.com/aaronsaloman8
