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What is Music Licensing?



Music licensing creates revenue streams for songwriters, music publishers, artists, producers and record companies, but few people know what it actually is. What is music licensing? Music licensing is the process by which music publishers and record companies grant permission for others to profit from the use of songs (owned by songwriters and music publishers) and recordings (owned by artist, producers, and record companies).


“Others” includes television and radio programs, podcasts, videos, television and radio advertising, internet advertising, movies, video games, musical greeting cards and musical merchandise (music boxes, coffee mugs, etc.).


Music licensing can sometimes be a very complicated process because songs and recordings are often co-owned by multiple people and/or entities. And you really can’t do very much with a song (other than record it yourself via a mechanical license) unless you also license the recording in which the song is embodied. So, in most instances, you will need to obtain two sets of licenses for the use of a song.


In this article, we’re going to give you a brief overview of the various kinds of music licenses, the rights they grant, and from whom they’re obtained.


Mechanical License


The mechanical license grants permission to record a song. The statutory mechanical royalty rate is $0.91 per copy to be distributed and is paid at the time the license is secured.


Until just a couple of years ago, mechanical licenses were granted by the Harry Fox Agency on behalf of songwriters and music publishers. However, the Music Modernization Act (MMA), signed into law on October 11, 2018, changed that. Title I of MMA created a blanket license for interactive streaming services, and established a mechanical licensing collective (MLC) as well as a digital licensee coordinator (DLC), which makes it easier for services to obtain licenses and for creators to collect royalties.


The Mechanical Licensing Collective (“MLC”), which went into effect on January 1, 2021, is a nonprofit entity that administers the new blanket licensing system established by the MMA beginning on the “license availability date.”


The MLC receives notices and reports from digital music providers, collects and distribute royalties, and identifies musical works and their owners for payment. It establishes and maintains a publicly accessible database containing that contains information related to musical works (and shares of such works) and, to the extent known, the identity and location of the copyright owners of such works and the sound recordings in which the musical works are embodied.


In cases where the MLC is not able to match musical works to copyright owners, it is authorized to distribute the unclaimed royalties to copyright owners identified in the MLC records, based on the relative market shares of such copyright owners as reflected in reports of usage provided by digital music providers for the periods in question.


Synchronization License


A synchronization license (a/k/a "sync" or “synch”) grants the right to use a musical composition in conjunction with a timed visual sequence (audio-visual images on film or videotape). Sync licenses are granted to movie and television production companies, advertising agencies, video game developers and all others who wish to synchronize copyrighted music with moving visual images. Karaoke equipment manufacturers must also obtain a synchronization license.


Synchronization licenses are obtained directly from the copyright owner (usually the music publisher) and synchronization license fees are paid at the time the license is obtained. This is called a “front end” fee. Sometimes, “back end” fees are also paid over time (a/k/a “residuals”), but not always. Whether or not the copyright holder(s) will receive residuals depends upon several factors, one of which is the stature of the composer and publisher of the musical composition.


Sometimes, music supervisors in television and film will use a third-party to “clear the rights” to a song or a sound recording (or both). These third parties are called music rights clearing houses. Examples would include Music Bridge, Kurator, and EMG.


Master Use License


A master use license grants permission to use a copyrighted sound recording in a new recording or video. These licenses are generally controlled by record labels, but in cases where artists or record producers have maintained ownership of their masters, permission would be obtained directly through those individuals.


Normally, in order to obtain a master use license, you must specify the number of minutes of the recording you intend to use, and you will be required to fully explain that usage. Obtaining a master use license does not, however, grant sync rights unless the two rights are specified in a single license agreement called a Master Use and Synchronization License Agreement. Master Use licenses are obtained directly from the rights holder, normally the record company that owns the sound recording.


Print License


A print license is obtained when someone prints a sheet music compilation, or any time the sheet music of copyrighted work is reproduced. Want to print lyrics from your favorite song on a t-shirt and sell them on Amazon? You will need a print license. Own a music-themed restaurant and want to print on your menus the lyrics to hit song? You will need a print license. Print licenses are obtained directly from the music publisher.


Performance License


The performance license (“small performance rights”) is perhaps the most common form of music license issued today. The term "performance" generally applies to any broadcast of an artist’s work. This includes businesses that play music in their store, jukeboxes, or any other form of public performance--including radio broadcast and concerts.


Performing rights organizations (a/k/a “PROs”) such as BMI, SESAC, and ASCAP generally manage public performance licenses, collect performance license fees, and issue performance royalties to songwriters and music publishers on a per-use basis.


However, digital performances (i.e. - internet-based performances) are managed by Sound Exchange, which was created specifically for the purpose of collecting royalties pursuant to digital performances of copyrighted music and paying those royalties to rights holders, namely artists and record labels.


Theatrical License


The theatrical (“grand rights”) license grants the right to use copyrighted musical compositions in theater productions, a/k/a “dramatico-musical productions.” This license is also obtained directly from the rights holder(s), namely the songwriter and music publisher.


Videogram License


Obtained directly from the music publisher and record company, a videogram license grants permission for a video producer to produce and distribute an AV program containing a copyrighted song and/or sound recording. A videogram license covers licenses for programs contained in audiovisual devices that are primarily intended for sale to the public (such as DVDs, Blu-ray discs, and other home video devices). For songs, the videogram license is obtained from the music publisher. For sound recordings, the videogram license is obtained from the record company. So, in other words, each distribution will necessitate the obtaining of two sets of licenses: one set from the music publisher and one set from the record company.


The reason for this is that songs/musical compositions and sound recordings are owned and controlled by two separate entities. Songs/musical compositions are owned and controlled by music publishers. They do not, however, own the sound recordings of the songs in their catalog. Sound recordings are owned by record companies.


This same principle holds true for the synchronization license, as well. The underlying song/musical composition must be licensed separately from the sound recording, from the music publisher and record company, respectively.