The definitive guide on beats licenses.
The sale of beats online has changed a lot in recent years, today, most producers sell their beats as licenses. Something that began as a novelty in websites such as Soundclick or Myspace, has become something massive, being Beatstars, Airbit, Soundee and Soundclick the most common platforms to do so.
It has never been so easy to produce music and have a beats shop like today, but it is not an easy business. In this guide I will explain the differences between exclusive beats and licenses, it is very useful both for producers who want to sell their beats, and for artists who are interested in acquiring quality beats and want to know how to better invest their money.
Once you have finished reading this guide, you will know everything there is to know about the online beats licensing business.
Table of Contents:
Part 1 “What are beats licenses? “
– Differences between exclusive and non-exclusive licenses.
– Non-exclusive licenses and their limitations.
– Types of non-exclusive licenses.
– Exclusive licenses.
Part 2 “Royalties and types of rights”
– Who receives the mechanical royalties?
– Royalties of composers.
– Performance royalties.
– Editorial royalties.
Part 3 “Copyright, know which part is up to you”
– Sound recording copyright (SR-Copyright)
– Performing arts copyright (PA – Copyright)
– Derived work.
– Beats with third party samples.
Part 4 “The mistake of stealing a beat from the producer”
Part 1 “Beats license description”
A producer makes a beat and uploads it to his online store, any artist can buy that rhythm and download it directly. The producer for the purchase of the beat gives the artist a license to use with which the artist has a series of user rights to create and distribute the song. That license agreement is the legal proof that the producer has given a permission to use the artist.
It is very common for artists to ask producers for free beats, but even when the producer sends them a beat, if there is no legal agreement (license), that beat cannot be used anywhere, since there is no legal permission from use. In this error we can also put artists who try to keep the beat or a part of the beat of some producer, recording or capturing the system audio. That audio capture can never be used, since the instrumentals are protected with content id and without legal agreement, that beat is useless.
Differences between non-exclusive and exclusive licenses.
• Non-exclusive licenses are cheaper than exclusive licenses.
• Non-exclusive licenses allow you to sell a limited number of physical copies and streams, not exclusive ones.
• Non-exclusive licenses usually have a duration of 1 to 10 years, the exclusives never expire.
• In non-exclusive licenses you have 50% of the publishing rights, in the exclusive ones it is negotiable, in my case in the exclusive licenses I offer the artist 80% of the publishing rights.
• Non-exclusive licenses can be used by several artists, the exclusive ones as well but are removed from the sale when they are sold to an artist.
• Non-exclusive licenses are ideal for amateur artists or artists who have not signed for a label, exclusive for signed artists or with large numbers on social networks and platforms.
Today, it is undoubtedly the most common way to buy a beat, with prices ranging between $ 30 – $ 250. It allows you to invest little money to upload your song to platforms such as Spotify, YouTube … etc. It has the advantage that you do not have to ask anything, just go to the producer’s website and buy the beat directly, once the payment is made you will receive the beat without the watermark and its use license, with the purchase date. Taking special care to respect the uses that the producer offers with each license.
Non-exclusive licenses usually have limitations and expiration dates, for example you can buy a very basic license that only offers the beat in an mp3 file. You may only be able to use it for a video with 2000 views for example, or for a song with 5000 streams. In addition, the cheapest licenses do not usually let you monetize your songs on YouTube, a mistake that artists often make, is to buy the cheapest license, make a video and monetize the song, then the problems come when they see that the producer has collected everything the money generated by that artist on YouTube, for something there is the content id. Sometimes these artists will be forced to remove the song by
A beat can be sold many times in the form of a non-exclusive license, it is the artists who have to decide if that is a problem for them. Honestly, if you are an artist who does not have many followers and has not signed with any label, you will get more out of non-exclusive licenses, since by investing little money, you can get more music and your fan base will increase until you are Ready to take the next step. On the opposite side are the artists signed by a label or with many more powerful followers and numbers, to them if I recommend that they acquire an exclusive license.
Different types of non-exclusive licenses.
The types of license depend on each producer, in my case I offer Mp3, Basic, Premium and Unlimited licenses … being the most expensive one that offers you the most rights, although my best selling license is the Premium, since it offers the highest quality of audio, trackout the beat by tracks and monetize.
I recommend that artists always try to buy the Unlimited license, if it is within their budget, it is the best way to save stress in the future. Since if you buy a license with a limit of 2,000 streams for example and exceed the limit, you are legally bound by contract to do a license upgrade, but imagine that the beat was already sold exclusively … You could not do the upgrade since The beat would not be available anymore.
When you acquire an exclusive license, there is no restriction of use rights, you can also use the beat in different projects, exploiting the beat to the fullest. When you buy an exclusive beat, you are the last person to take that beat … the beat may have already been sold in the form of a license before, but people who have previously purchased the beat, can continue using it without problem, until it exceeds the license or expiration limit, since they have their legal use license. In the exclusive contract there is a section that informs about it.
These are the most common differences between exclusive and non-exclusive licenses, although there are more aspects to take into account, such as royalties, publications and copyrights, in this we will go deeper, since it is a very important part.
In recent years, exclusive sales contracts have changed, adapting better to the industry standard. The two ways of selling exclusive rights are the sale of exclusive rights and the sale of exclusive property.
By selling exclusive rights the producer is still the original author of the music, he can still collect rights to publish and publish writers.
By selling the exclusive property, the producer sells the rhythm, including all interests, authorship, copyright … etc. These offers are also known as contract work, basically the artist retains the real property over the rhythm, and from that moment he will be considered the legal author of the rhythm. I would never contemplate this last option because I do not find this type of contract ethical, that each artist is respected for his work and his name is in each publication should be mandatory.
Part 2 “Royalties and types of rights.”
It is not easy to understand everything behind the music industry, too many contracts and very different legal agreements. but I will explain to you the best that this aspect can and for this we will begin by understanding two forms of royalties:
1. Mechanical royalties are generated when music is distributed physically or digitally. Printed, digital sales (Itunes) or transmissions, eg Spotify.
2. Performance royalties, live performances, radio … etc.
Normally the artist keeps 100% of the mechanical royalties, whether exclusive or non-exclusive the license he has acquired. Today there are services such as Cdbaby or Distrokid, which pay those royalties directly to the artist, if he is an independent artist. When the artist is in a stamp, those royalties are paid to the stamp and the stamp pays a percentage to the artist.
Sometimes, in exclusive licenses, the producer can request between 1 and 10% in mechanical royalties, this is known as producer points or royalties. Years ago it was easier to sell instruments at quite high prices, but today there is a lot of competition between producers and depending on the artist, there are producers who prefer to sell the beat even below $ 1000 but requesting points in mechanical royalties. It is a way to protect yourself because if the song is a hit, they know that they always have extra money, which after all for the artist is 1-10% only if you get enough benefits.
In this scenario, the price that an artist pays for exclusive rights is considered an advance against mechanical royalties, which may be required in the future. It is calculated on the net profit of the song, which means that all the costs to create the song, including the exclusive price, can be deducted first before the producer gets his share.
1. The artist pays $ 1,000 for the exclusive beat.
$ 2,200 for study time.
3. $ 200 for mixing and mastering.
Total = $ 1,400
4. A year goes by and the song generates $ 5,000 in mechanical royalties.
5. Net profit is $ 5,000 – $ 1,400 = $ 3,600
6. The share of the producer is 3% of $ 3,600 = $ 108.
For an independent artist, $ 5,000 is a lot of money to generate in royalties, but still, it’s only $ 108 that the producer earns.
Royalties of composers.
In copyright law, a producer is also considered a composer. Composer royalties apply to all people who have intervened creatively in the song, producers, composers and sometimes even engineers.
In general, non-exclusive beat licenses are sold with 50% publication and participation of writers. This is not negotiable, since the musical part is half of the song and the other half is the lyrics, that half has to be distributed among the different artists who have written the lyrics.
Example in a non-exclusive license.
1. Producer 50%.
2. Writer 1 25%.
3. Writer 2 25%.
Example in an exclusive license.
1. Producer 30%.
2. Writer 1 35%.
3. Writer 2 35%.
Performance royalties are collected and paid by implementing rights organizations (PRO) such as ASCAP or BMI in the USA or Sgae in Spain. Each country has its own organization, check which one is yours. These royalties are divided into two parts, royalties from the composer or Share of the writer, and editorial royalties.
The PRO collect these royalties and divide them into 2 groups.
For every $ 1 earned in performance royalties.
0.50 goes to composer royalties (this money is paid by the Pro directly to the artists) and the other 0.50 goes to royalty royalties (the PRO pays it directly to the publishing company or the publishing administrator).
Unlike the copyright of Songwriter, the publication can be assigned to external entities called publishing companies. It is likely that most independent artists and producers do not have an editorial agreement, which means that they will have to collect the royalty royalties themselves.
Surprisingly, here there is a lot of money left on the table. If you are an independent artist or producer who is only registered with a PRO and not with a Publication Manager, half of what you have earned is still waiting for you to pick it up.
In terms of online licenses, whether exclusive or not, the percentage of publishing rights is generally equivalent to the participation of writers. 50% of the participation of writers is equivalent to 50% of the publication.
Songtrust can help you collect these royalties if you are an independent artist.
Part 3 “Copyright, know which part is up to you”
It is difficult to understand and explain, I recommend that if you are a serious artist, consult all the doubts you have regarding copyright with a lawyer. Let’s talk about licensing rights to try to understand who has that.
Sound Recording Copyright (SR-Copyright)
When you create a new song, next to the producer, this is known as Master or sound recording. The difference between an exclusive or non-exclusive license plays an important role here. In an exclusive license, the master rights will be transferred to the client (artist) and will become their exclusive property, without any claim from the Producer. The only exception here is the right of the producer to jointly claim the copyright of the underlying musical composition. The producer will always be the original creator of the music, and this is what we call PA-Copyright.
As an artist, buying beats from a producer:
1. If you have the exclusive license of a beat, you own the rights of recording, sound and master.
2. If you have a non-exclusive license, you do not have the rights to record sound or master, you have only been granted the right to use the rhythm and commercially exploit the song depending on the terms and conditions of the non-exclusive license, however , they own the PA copyright of the letters.
3. The joint creation of the song will be called Derivative work.
Copyright of the performing arts (PA – Copyright)
Imagine that you go to the website of a producer and find a beat that you like, you acquire the license and make a song that you distribute through CDBaby or any other platform … The song has two elements of copyright, music (producer) and lyrics (artist).
Regardless of whether you have purchased an exclusive or non-exclusive license. The producer will always be the owner of the copyright of the music and the artist will always be the owner of the copyright of the lyrics (unless it is written by someone other than the artist).
This is what we call the performing arts copyright (PA-Copyright).
The moment you write something on paper, hit your DAW or save a demo song to your hard drive, it is copyrighted! It is not necessary to register anything to have your copyright of the work, although there are some benefits and it is always better to have everything registered, you do not lose your right for not doing so.
A remix, a Spanish version of an English song, parodies … These are new versions created with a pre-existing copyrighted material. Speaking of licenses, a non-exclusive agreement authorizes the artist to create a song (new version) with the copyrighted material of a producer (the beat).
The only person who can authorize a derivative work is the owner of the underlying composition. In this case, the producer.
Beats containing third party samples.
I do not usually use third-party samples and when I do, I have changed the original sound so much that the sample is sure to be unrecognizable. I do it this way because:
1. If we make a beat with a protected sample, we need the consent of the original author of the sample, that is so.
2. If we sell a beat with a protected sample to several artists as a license and each artist makes a song, it would rain the problems with claims, I prefer to save these problems.
A common mistake is when producers who are selling beats with third-party samples think that they can pass the responsibility to “clean those samples” to the artist who grants the license.
Part 4 “The mistake of stealing a beat from the producer”
It does not happen once or twice, it is common that being a producer, if you have an online store, you see that someone who calls himself an artist, uses a beat of yours without buying a user license, to create a song. When this happens, we can contact the artist and inform him of the improper use of the beat. We can also give you the option to buy a user license or to remove the song from any platform.
I do not think we should waste time telling someone that he has used your beat knowing he couldn’t, because he has even bothered to cut the watermark that protects the beat. My only option is to demolish DMCA.
Making a DMCA demolition is when the content is removed from a website at the request of the content owner or the content copyright owner. It is an internet standard widely used by website owners and internet service providers. In our case we have the right to process a notice of elimination to any artist who uses a beat of ours and publishes it on the internet, without having a license to use that instrument.
If we see that the song is not earning many visits and has a poor sound, two factors that are usually given in this type of artists, it is best to let it pass, you will save time and money. But if the song we see that it has enough reproductions, demolishing DMCA is the best option.
More information here: https://www.dmca.com
We have reviewed different aspects of beats licenses, royalties, copyrights, mistakes that are usually made as an artist, there is not everything there is but a large part. I hope I helped you to have a little clearer some details, not so pretty of the music industry.
Malakkor. Music producer since 1997.