When talking about music licensing, what does ‘Royalty Free’ actually mean, if there are royalties out there who’s paying for them, and how relevant is all of this for your average content creator anyway?

I mean, why does it have to be so complicated? (SPOILER ALERT: IT DOESN’T).

Royalty Free Music: The Short Version

When licensing music for your content, you might have made the assumption that if a production music supplier didn’t specify “Royalty Free”, that you’re going to pay some kind of ongoing royalty to use that music in your content, right?

Well, that’s actually not the case.

For the average content creator, once you’ve cleared a piece of music for use in your production, there are typically no more fees for you to pay. Never. Nothing. Zilch. Your work is done.

Then, once your content leaves the edit suite and enters the realm of television broadcasting, radio, YouTube etc, new ‘performing entities’ come into the equation. These performing entities are responsible for what’s known as the ‘performance, communication and broadcast’ of your content, and of course the music within. It is there, indirectly from these performing entities, where music rights holders earn royalties.

The lion’s share of these royalties are negotiated and collected via an international network of affiliated Performing Rights Organisations (or ‘PROs’).

But to fully understand how royalties are generated, we need to go a little deeper.

What is Music Copyright?

Ok, so a song is not just a song. Very broadly, music rights can be broken down into two main camps:

1. 1. 1. Rights in the composition – a unique series notes & lyrics on paper – usually owned by the composer / publisher.
      2. Rights in the sound recording – the studio recording of those notes & lyrics on paper – usually owned by the composer / record label.

Composition Rights

UPFRONT

On the Composition side of things, to use a piece of music in your content you’ll need a Mechanical Licence (for audio-only) or a Synchronisation Licence (for video), also known as a Sync or Synch Licence.

BACKEND

Rights associated with the performance, communication and broadcast of a composition are known as Performing Rights. These are negotiated, collected and distributed via Performing Rights Organisations (PROs) like APRA AMCOS in Australia.

Sound Recording Rights

UPFRONT

On the Sound Recording side of things, when licensing a piece of music you’ll need a Master Licence covering the original recording of the composition.

BACKEND

Rights associated with the the phonographic performance or broadcast of a sound recording (as opposed to a composition) are known as Neighbouring Rights. These rights are negotiated, collected and distributed via organisations like the PPCA in Australia.

How Long Does Copyright Last?

The term of copyright in most territories is defined as ’70 years after the death of the composer’. Most modern music is therefore still covered by copyright and must to be cleared before use.

Also, don’t forget there are two sides to this equation. So while the composition itself (notes and lyrics on paper) may no longer be in copyright, the sound recording of that composition may well be.

If in doubt always check, making a mistake in this space can get messy fast.

Clearing Copyright (for Content Creators)

In order to use a piece of music in your video, film, podcast, advertisement or any other media production, assuming the track is still in copyright, you’ll need to secure an upfront licence covering both the composition and sound recording.

The terms of the deal can vary dramatically in areas like:

• Media – i.e. online only, television, theatrical, physical media like DVD, or all media;
• Territory – i.e. regional, metropolitan, national, worldwide; and
• Term – i.e. 6 months, 12 months, ‘in perpetuity’ (forever).

In the most cases you can license a piece of music for use across all media platforms, worldwide, in perpetuity (forever).

Commercial Music vs Production (Stock, Library) Music

Commercial music

Licensing a commercial track (like Rihanna, David Bowie or Snoop Dogg) requires upfront clearances from different entities, that is both the publisher side (for rights in the composition) and also the record company side (for the master rights). Depending on the artist, you might be looking at 5 to 6 figures for these clearances. Don’t forget because you’ll need to negotiate with both sides of the equation, one side might say no or ask for more money so there’s no guarantee you’ll succeed.

HOT TIP: To save cash, you can always commission a ‘re-record’ of a commercial track (a new audio recording of the same notes on paper). Then, because you’re not licensing the physical sound recording from the record label, you’ll only need to deal with the publisher side.

Long story short, licensing commercial music can be expensive, requires negotiation with two parties, can take time and there’s no guarantee it will work. But if you really want a particular track, that’s the price you must pay.

Production music

Then there’s production music (stock music, library music) – call it what you will – it’s music created with the specific intention to be easily licensed for all kinds of media productions.

In the case of production music, both the composition and sound recording are often pre-cleared, so you can pay a simple one off mechanical/sync fee to use the track, then subject to your licence agreement, it’s yours to use in your film, video, advertisement or whatever you’re creating with no strings attached.

In order to avoid dealing with restricted use cases, limitations on different platforms, restrictions on monetisation and so on, you should seek out flexible licensing terms like all media, worldwide use, in perpetuity.

Performing Rights Royalties

Once you’ve paid your upfront fees that’s it, right? For content creators, most likely yes. But the real answer is: it depends who’s asking the question.

Whenever a piece of copyright protected music is publicly performed, communicated or broadcast, be that in a cafe, nightclub, cinema, on TV, radio, Spotify, YouTube, Facebook, Netflix or just about anywhere else, a small royalty is collected, held, and eventually distributed to the rights holders.

In the case of the composition side of copyright (which is all I’ll talk about for now), these are called Performing Rights Royalties, collected and distributed by internationally affiliated Performing Rights Organisations (PROs). In Australia, our PRO is known as APRA AMCOS.

These royalties are an essential component of a working composer’s income. Professional composers will almost always be a member of a Performing Rights Organisation as this makes up a substantial part of their income.

Who Pays For Royalties & How?

Ok, this is the fun bit and where almost all the confusion arises.

Performing Rights royalties are not paid – either directly or indirectly – by the content creator, they are paid by the performing/broadcasting entity.

Performing rights organisations (PROs) collect royalties from the performing entity. Think broadcasters, radio stations, cafes, cinemas, nightclubs, Netflix, YouTube, Spotify: those entities responsible for the actual public performance or broadcast of the music.

• Broadcasters typically pay an annual blanket licence fee to their local PRO covering music use across all programs. This fee is generally a percentage of advertising revenue or subscription fees received by the broadcaster.
• Venues such as cafes and pubs also pay a blanket licence fee to their local PRO. In this case the fee might be a percentage of income from sales of sandwiches or beer.
• Netflix, Spotify & YouTube all act a little like a broadcaster, allocating a percentage of advertising revenue or subscription fees to performing rights.

You get the idea. The creating entity, the content creator, the one producing the content – will almost never be the one paying performing rights fees, unless they are also the performing/broadcaster entity.

As a content creator, once you’ve successfully licensed a piece of music for use in your content, so long as your upfront licence fee covers all media platforms, worldwide use, in perpetuity, regardless of whether the music is labelled as “royalty free”, you’ll never pay another cent.