Agreements & Contracts

A licensing deal ensures all copyright owners are entitled to accurate and fair compensation for the use and exploitation of their music. The ‘licensor’ in a licensing deal is the owner of a copyright, but may also refer to any party authorized by the copyright owner to act on the owner’s behalf.

Typically, music licenses grant permission for the licensee to exercise one or more of the exclusive rights reserved by the licensor. These can include permission to:

• Reproduce the copyrighted work.
• To create derivative works based upon the copyrighted work.
• To distribute copies of the copyrighted work for sale to the public.
• To perform the copyrighted work publicly, by means of a live performance.
• To “play” the copyrighted work publicly, by means of a digital audio transmission of the master recording.

When a music copyright owner gives permission for a third part to exploit any or all of the above rights, this creates a music license.

License Types

Whilst all similar to some degree, there are important nuances between license types. These variations serve different functions which allow for the specific use and licensing of copyrighted material.

Ordinary Licenses

Ordinary licenses are covered in Section 27. (1) of the Copyright Act, and are the most basic type of license. Essentially, in its simplest terms, an ordinary license is the right to do or use something that would otherwise be an infringement of someone else’s copyright.

The Copyright Act states: “it is an infringement of copyright for any person to do, without the consent of the owner of the copyright, anything that by this act only the owner of the copyright has the right to do”.

Sole Licenses

A sole license is an ordinary licence which is granted to the licensee along with a contractual promise not to provide a similar permission to anyone else.

In other words, a sole license functions the same way as an ordinary license, but it also contractually obligates the licensee to only grant that license to one person or party.

You might see sole licenses in journalism. For example, a columnist might grant a newspaper permission to publish their article, however it would usually come with a clause that prevents the journalist from allowing any other competing newspaper to also publish the article.

Exclusive License

An exclusive license is similar to a sole license; however, it also prevents the copyright owner from using the material they are licensing. In other words, whomever is being granted the license is the exclusive and only person or part allowed to use the copyrighted material, inclusive of the creator of said material.

Recall the example above. In an exclusive license, the journalist would be legally prohibited from self-publishing their own article. In this instance, the newspaper would be the sole person allowed to use, publish distribute (etc.) the piece of work in question.

You might see exclusive licenses for soundtrack in films. For example, if musicians are hired to create a song, composition, or other for a film, it is likely that the work will be granted to the film producer via an exclusive license. Meaning, the musicians involved would be prohibited to licence any content they created for the film on any separate or additional body of work such as a studio album, live album music video or other.

Assignments

Assignments are the transfer of copyright to a new owner. They differentiate form exclusive licensing in that assignments are not revocable: once an assignment is granted to a new owner, it cannot be undone (unless the term of the assignment expires, for example).  Put more simply, an assignment of copyright is akin to “selling” the car, whereas a licence of copyright is more akin to “renting out” the car.

Additionally, in an assignment, the assignee is the owner of the copyright. Typically, the assignee would be free pursue any licensing agreement in the same fashion that the original owner might have prior to the assignment in question.

Section 13(5) of the Copyright Act states that “In the case of work of architecture, copyright shall subsist only in the artistic character and design and shall not extend to processes or methods of construction.”

Overall, understanding the differences between different forms of copyright licensing will not only help copyright holders protect their intellectual property, but also help them license their intellectual property appropriately.

Synchronization License (Sync License)

This method of licensing refers to music that is going to be paired with some form of visual media. It has a broad range of uses, including commercials, studio films, streaming advertisements, personal films, internal communications, and more.

Mechanical License

A mechanical license is needed for any physical reproduction of an artist’s work. Primarily this refers to the manufacturing of CDs or distribution of music in any tangible form. Artists, aka copyright holders, will have agreements with record labels, distributors, and publishers on the mechanical terms of their music, and are generally paid per-copy.

A mechanical license is also needed if you are planning on recording a cover song, even if only a portion of the original song is used. This also includes adding your own lyrics, re-mixing, or changing anything about the original recording that affects the overall integrity of the artists’ composition.

Master License

Master licenses are a bit more complex than most others, in that they’re similar to sync licenses but not quite as broad-ranging. A ‘master right’ is held by the person who owns the recording of a song. The master license gives the user permission to use a pre-recorded version of a song in a visual or audio project, but does not allow a user to re-record a song for a project (i.e. to cover or edit a song). Generally a master license is issued in conjunction with a sync license.

Public Performance License

This license is perhaps the most common form of music license issued today. While ‘performance’ may be a limiting term, it applies generally to any broadcast of an artist’s work. This includes businesses who play music in their store, jukeboxes, or any other form of public performance — all the way up to concerts.

Performing rights organizations (PROs) such as BMI, SESAC, and ASCAP generally manage public performance licenses and issue music royalties to artists on a per-use basis.

Print Rights License

This license refers to the physical copy of the sheet music that an artist has created. It’s needed when someone prints a sheet music compilation, or any time the sheet music of copyrighted work is reproduced.

Theatrical License

Also a very specific form of written permission, theatrical licenses are very common in the theater industry. The license is required any time a copyrighted work is performed on-stage in front of an audience.

Work For Hire (WFH) Contract

A WFH agreement means, essentially, that if you hire a musician (or producer, or arranger) to contribute to a project or recording session, you will retain copyright ownership of the finished piece and are considered the legal author of the work.