What Kind of Licensing Deal Should You Sign?

Are you devaluing your music by signing non-exclusive license agreements?

Do music supervisors privilege exclusive deals?

What are the risks of signing an exclusive deal?

Are you shooting yourself in the foot every time you sign a non-exclusive deal with a new music library?

These are some of the questions that come up every time musicians receive an offer to license their music.

I’ve got you covered with this article.

The non-exclusive license agreement

Definition

When you license one of your songs through a non-exclusive agreement, this is what happens:

• You are the licensor
• You give the licensee (e.g. a production music library) the right to offer your song to a third-party
• The third-party can purchase the right to use your song
• The licensee pays you part of the fee received from the third-party
• You can sign another non-exclusive agreement with another licensee to shop that same song around to third-parties

Advantages of the non-exclusive license agreement

• Your song is not tied down with one company who may or may not find you licensing opportunities
• You can maximize small opportunities

The exclusive license agreement

Definition

When you license one of your songs through an exclusive agreement, this is what happens:

• You are the licensor
• You give the licensee (e.g. a production music library) the right to offer your song to a third-party
• The third-party can purchase the right to use your song
• The licensee pays you part of the fee received from the third-party
• You can NOT sign another agreement with another licensee to shop that same song around to third-parties.

Note: we’re talking of exclusive deals that cover a given set of songs. That is not the same as exclusive deals for the composer’s entire existing and future catalogue. Don’t sign one of those unless you get paid a huge advance!

Advantages of the exclusive license agreement

• Music supervisor is more likely to consider it because she knows she’s getting the best price (i.e. there are not 20 music libraries selling the same track for less) and the song won’t be used on 100 low-quality projects (thus devaluing the project she’s working on)
• You are more likely to get a fair price for the sync fee (unless you gave exclusivity to a really cheap music library. Don’t do that. That’s a crazy thing to do! 🙂 )
• Advance (if you can negotiate it, which you probably can’t :/)

What is the biggest risk when you sign an exclusive or non-exclusive agreement?

In the case of an exclusive license agreement, you risk handing out your hard work to a company who doesn’t get you a single placement. If you’re an indie singer/songwriter, that could mean a couple of years working hard to put together your album down the drain in the snap of a finger.

With non-exclusive deals, the biggest risk is devaluing your reputation as a serious music composer. The emergence of hundreds of non-exclusive music libraries pitching a similar catalogue with seemingly random prices has led music supervisors to focus on music they can license exclusively.

How do you get the best of both worlds?

Here’s a simple trick to enjoy the advantages of non-exclusive deals without being perceived as a little nobody musician: pseudonym.

So simple!

There’s nothing stopping you from uploading some of your songs to non-exclusive music libraries under a pseudonym. That leaves you free to place another section of your catalogue with a more premium agency looking for exclusivity.

Now to be clear: you should NOT, under any circumstances, place a song in a non-exclusive library under a pseudonym and then sign an exclusive agreement under your name for the same song. This is NOT what I am suggesting at all!

What I am suggesting is that if your catalogue is big enough, you might want to offer say 10 tracks on an exclusive deal and sign non-exclusive deals for another 10.

How to mitigate the risks associated with exclusive deals?

Even when you have a fairly large catalogue, signing a few songs on an exclusive deal can be a little scary. There’s always the risk that the company isn’t going to get you the placement that would make your initial music making investment worthwhile.

Here are some things I do to limit that risk to a minimum:

• I research the company to figure out if they’re likely to place my music: how long have they been around? Are they currently a big player? What are the chances that they’ll just disappear (taking my songs with them) in the next few years? Do they have a huge roaster of composers or will they be hands on and dedicated to my music?
• I limit the costs of making music so that, in the event that the library doesn’t place my tracks, I haven’t just wasted 20 hours of my time and 300$ on one song that’s never going to make me money
• I test drive the exclusive deal, meaning I sign over 10-20 tunes and wait 6-12 months before making a further commitment
• I stay in touch with my contact there, make sure I stay at the front of their mind in case an opportunity suddenly arises 😉

Where does that leave you?

That’s a lot of information and you’re probably still not quite sure what YOU should do.

Here are a few scenarios that might help you make a decision based on:

• the size of your catalogue and
• number of credits you already have or don’t have.

Scenario A: small catalogue, 0-5 credits

Exclusive deals should be a no-no unless you can negotiate an advance or you’re 100% confident (a written guarantee would be best) that your tunes WILL be placed.

Scenario B: medium sized catalogue, 0-5 credits

With 60 tunes or so in your catalogue, you can afford to experiment with a mix of exclusive and non-exclusive deals.

Make sure you do your research before signing an exclusive deal.

And don’t hesitate to use a pseudonym if you’re afraid it could hurt your brand.

Scenario C: small catalogue, 6-10 credits

How did you get those credits? Do more of the same before you change your approach!

With a small catalogue, I recommend non-exclusive deals unless you’re confident that you can grow your song list quickly.

When you have a large catalogue, it doesn’t matter as much if an exclusive deal backfires. You’ll still have some earning potential.

Scenario D: large catalogue, 6-10 credits

If you have credits and a large catalogue, your focus should be on growing your list of credits. Spend some time to reflect on what’s worked well for you and try to find similar deals.

In the meantime, nothing’s stopping you from signing songs to non-exclusive deals under a pseudonym. You might even want to use several if you’re very prolific in different genres.

That big brown area…

that covers everything above 10 credits and 100 tunes in your catalogue is a full-blown, experiment and take the time to figure out what you enjoy doing, what you’re best at and what works for you zone.

***

Music licensing can be a very lucrative field but it is also very competitive and full of minefields.

On top of the music making struggles (being inspired, finding the time to write, having the setup to record, etc.) and the admin stuff that crowds the brain (PRO registration, copyright, etc.), you have to learn to navigate people’s prejudices (big catalogue = poor artist or production music = bad quality music) without getting screwed over (exclusive deal with no end product or non-exclusive deal with stupidly low prices).

Creative & Productive is about helping you approach all these challenges and getting you to take action instead of feeling overwhelmed and ending up discouraged.

If you’d like a little bit more hands-on coaching on these subjects, don’t hesitate to check out the online courses and challenges I’ve put together.