Music Licensing and Music Licenses

This blog references the term, music licensing, quite a bit.  Generally, when we talk about licensing, we are referring to licensing music for film and television, or “synch” licenses.  However, in nearly every aspect of music use, there is a license involved.  Licenses are required to sell, broadcast and play live music.  Confusion arises when songwriters, artists, broadcasters and even club owners don’t know if they are properly licensed in their area of music involvement.

Here are some of the most basic licenses needed:

Mechanical Licenses

Performance Licenses

Digital Licenses

Synchronization Licenses

Master Use Licenses

Mechanical Licenses are required when a song is recorded and sold, either digitally or physically.  These ensure that the songwriters and publishers are paid when a recording is sold. The Harry Fox Agency (HFA) is the largest administrator of mechanical rights in the U.S, handling over 15.2 million licenses for nearly 36,000 publishers.

Mechanical fees shared between songwriters and publishers are paid at a rate of 9.1¢ per song and 24¢ for ringtones.  Fees for streamed uses are still negotiated individually with each service. Without mechanical licenses in place, it is illegal to release a CD or digital recording.

Performance Licenses grant the rights to publicly perform a musical composition. These licenses include live performances and broadcast via a sound system radio or TV.  These rights administered via performing rights organizations, such as BMI (Broadcast Music, Inc), ASCAP (American Society of Composers, Authors and Publishers), or SESAC.

People incorrectly assume that it is the responsibility of musicians and entertainers to obtain performance licenses.  However, it is the business owner who must obtain the license. Just like insurance and other business licenses, paying music license fees is simply another cost of doing business. Not properly licensing an establishment could be quite costly as damages can range from a minimum of $750 to a maximum of $150,000 per song played!

Fortunately, the licensing fee is determined by the size of the establishment, and the manner in which the music is performed, i.e., live, jukebox, videofeed, etc. Concert rates are based on the seating capacity, college and university rates are based upon the number of full time students and retail store rates depend upon square footage, etc.

Radio stations and television networks usually apply for blanket licenses that allow them to publically perform any song that the PRO’s administrate.  The fees they pay are based on the station's listener numbers and ad rates.

Digital Licenses are for Internet websites, and mobile applications. Companies that stream recorded music digitally—such as Internet radio services and webcasters must have licenses to digitally transmit music to listeners. SoundExchange administers these types of licenses for artists and labels. The PRO’s have special digital rates for publishers and songwriters.  The rates are much lower than the terrestrial broadcast rates. BMI has even created special “Live365” blanket licenses for “microcasters” and “minicasters.” Additionally, HFA licenses interactive streams for one cent (.01¢) per stream via Songfile.

Synchronization or Synch Licenses allow a song to be synchronized with pictures, and is the type of license required to use a song in a film or on television.  A Master Use license is required to use a recording in a film. These two licenses are required when a record is used, the Synch license to allow the use of the copyright and the Master use license to use the actual recording.  

Even though each of these documents is called a license, each has a specific purpose. Only the correct license can give you the protection you need, and grant the permissions you seek.  These licenses also make sure that each entity involved in a piece of music, i.e., songwriter, artist, publisher or label, receives compensation for the work that they assisted in creating.