Film Law: Music Licensing

Even the most casual observer of pop culture will be aware of the motion picture soundtrack phenomenon.

In recent years, movie soundtracks have reached yet another peak following the earlier glory years of the seventies (Saturday Night Fever, Grease, Urban Cowboy), eighties (Dirty Dancing, Footloose, Flashdance), and nineties (Romeo & Juliet, Swingers). Some of these soundtracks have even thrived regardless of the failure of the films they are associated with.

Movie soundtracks are a diverse lot, ranging from orchestral scores to preexisting songs to cutting edge compilations of newly recorded tracks by breakthrough alternative acts. Often the soundtracks combine all three of these approaches.  Some soundtrack records feature songs that are not even in the films.

Ideally, movie soundtracks can be a win-win situation for all parties involved. Movie studios have clearly noticed that soundtrack records are a potentially lucrative source of additional income.  Beyond that, soundtrack records are important marketing devices, particularly where there is a popular single and consistent MTV airplay of a video which may feature clips from the film.

Record companies are pleased to license tracks for a soundtrack, or to release a soundtrack album, because of the potential not only for retail sales income, but also for the opportunity to "break" newer artists (Iron & Wine, Brazilian Girls) and rejuvenate older acts (Bruce Springsteen, U2) with a quick chart fix between albums.

Creative Issues

Movie studios typically have in-house creative music executives who work with the filmmakers to choose the performers and writers for the soundtracks.  The ultimate decision often rests with the studio, although a director with sufficient clout might have the right of "final-cut" on the film, which may also encompass the right to select the music.

Increasingly, individuals known as a music supervisors act as a "bridge" between the numerous parties involved in the soundtrack process, including: the director, producer(s), studio, record labels, publishers, writers, and the performers.

While music supervisors rarely have the ultimate decision-making power, they are incredibly important in facilitating a complex process on an extremely tight time-frame, because the music is often one of the last elements added to the film.

The music supervisor will usually draw from his or her network of contacts in the music industry to line up songwriters and performers for consideration in the film.  Often the music supervisor is involved in the negotiation process as well as the creative process of assembling the creative elements.

As we have seen, the soundtrack can be a valuable marketing tool; yet from the film studios' perspective the funds allocated to music budgets represent usually 2 to 5% of a film's total budget.

The studio's primary goal is to increase awareness of the film and to maximize long-term ancillary rights. Accordingly, the studio will usually attempt to acquire broad rights to exploit the song and recording without additional consultation, approval or payment to the writer and performers.

Licenses

It is important to remember that there are several types of licenses connected with the placement of music in a film project.

Synchronization licensing relates to the use of the musical composition in the film or other visual media.  (However, synchronization rights do not include the right to utilize the title of the song as the title of the production or to incorporate the story of the song into the film.)

A separate license is secured for the use of the actual recorded version of the song.  This license, known as a master use license, is usually acquired from the record company that has signed the performer to an exclusive artist agreement.

In addition, a mechanical license fee is paid to use the composition on the soundtrack record and a performance license fee is collected by the performing rights society (ASCAP, BMI, SESAC) for television broadcasts of the film and radio airplay of the soundtrack.

Synchronization Licensing

With new technologies emerging every day, major studios tend to request language for a perpetual grant rights "in any and all media, whether now known or hereafter developed," and without payment of additional fees. This is obviously a major negotiating point.

Compensation is most commonly in the form of a buyout, although it is desirable to attempt to secure a royalty or a rolling fee for video and new media usages.  It is common to request an advance in connection with royalty payments.

If the agreement calls for a royalty payment or other payment based on sales, it is particularly important that the agreement provide for periodic statements in connection with sales of the product.  Such statements may be rendered quarterly or twice per year. 

In addition, the licensor should always secure the right to arrange for an inspection or audit of the financial records relating to the product by a Certified Public Accountant or attorney designated by the artist.

End title credits are the rule for feature films.  Only rarely does an artist receive main title credit or listing in print ads.  In any event, the specific nature of the credit should be clearly set forth in the contract.

Master Use License

As noted above, the right to use the master recording of the song is a separate right from the synchronization license.

The master use license, therefore, only grants the right to use the physical recording itself.  However, the basic format and substance of the license agreement is very similar to the synchronization license.  In fact, the fees are often analogous for synchronization and master use licenses.

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