The sale of beats licensing online has changed a lot in recent years, nowadays, most producers sell their instrumentals that way. Something that started as a novelty on websites like Soundclick or Myspace, has become massive, being Beatstars, Airbit, Soundee and Soundclick the most common platforms to do so.
It has never been easier to produce music and have a beat store than it is today, but it is not an easy business. In this guide I will explain the differences between exclusive beats and licensing, it is very useful for both producers who want to sell their beats and artists who are interested in acquiring quality beats and want to know how to better invest their money.
Once you finish 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 licensing?
- 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 mechanical royalties?
- Composer royalties.
- Performance royalties.
- Editorial royalties.
Part 3. Copyright, know what part is yours.
- Sound Recording Copyright (SR-Copyright).
- Performing Arts Copyright (PA-Copyright).
- Derivative work.
- Beats with third party samples.
Part 4. The mistake of stealing a beat from a producer.
Part 1. What are beats licensing?
A producer makes a beat and uploads it to his online store, any artist can buy that beat 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 rights to create and distribute the song. That beats licensing agreement is the legal proof that the producer has given a permission of use to the artist.
It is very common for artists to ask for free beats from producers, but even when the producer sends them a beat, if there is no legal agreement (license), that beat cannot be used anywhere, as there is no legal permission to use it. In this mistake we can also include artists who try to keep the beat or a part of the beat of a producer, recording or capturing the audio from the system. This audio capture can never be used, since the instrumentals are protected with content id and without legal agreement, the person who uses the beat would be breaking the law.
Differences between non-exclusive and exclusive licenses
- Non-exclusive licenses are cheaper than exclusive licenses.
- Non-exclusive licenses let you sell a limited number of physical copies and streams, exclusive licenses do not. Very important: At malakkor.com all beats licensing are unlimited in sales and streams.
- Non-exclusive licenses usually last from 1 to 10 years, exclusive licenses never expire. At malakkor.com they never expire, you can rest assured.
- In the non-exclusive licenses you have 50% of the publishing rights, in the exclusive licenses it is negotiable, in my case in the exclusive licenses I offer the artist 75% of the publishing rights.
- The non-exclusive licenses can be used by several artists, the exclusive licenses can be used by several artists, the exclusive licenses can also be used by several artists, but they are removed from sale when sold to an artist. Since 2022 our exclusive beats have only one buyer and we also have a special page with exclusive instrumentals ready to buy.
- The non-exclusive licenses are ideal for amateur artists or artists who are not signed by a label, the exclusive licenses are for signed artists or artists with big numbers in social networks and platforms.
Today, it is undoubtedly the most common way to buy a beat, with prices ranging from $ 30 – $ 250. It allows you to upload your song to platforms such as Spotify, Youtube…etc. with little money. 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 done you will receive the beat without the watermark and its license of use, with the date of purchase. Be especially careful to respect the uses that the producer offers with each license.
The 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 usually do not 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 come the problems when they see that the producer has collected all the money generated by that artist on Youtube, for something there is the content id. Sometimes these artists will be forced to withdraw the song.
A beat can often be sold as a non-exclusive license, it’s up to the artists to decide if that’s a problem for them. Honestly, if you are an artist who does not have a large following and is not signed to a label, you will get more out of non-exclusive licensing, since by investing little money, you will be able to release more music and your fan base will grow until you are ready to take the next step. On the opposite side are the artists signed by a label or with many followers and more powerful numbers, to them if I recommend you to acquire an exclusive license, although there are many today who are satisfied with a non-exclusive license.
Different types of non-exclusive licenses
The license types depend on each producer, in my case I offer BASIC, STEMS, PRO and MIX but all of them are unlimited licenses (something that nobody does), being the most expensive the one that offers you more rights of use. My best selling license is the Premium, because it offers the highest audio quality, the trackout of the beat by tracks and monetize. But the one with which you will always earn the most money is the PRO license and it is the one I recommend if you are really betting on the future of your project.
I recently added a new license that has been very well received (The MIX license), it includes professional mixing and mastering of your song for a minimal investment. Many of my regular clients are getting their songs to sound perfect thanks to this license.
When you buy an exclusive license, there is no restriction of rights of use, and you can use the beat in different projects, exploiting the beat to the maximum. You will not be the only buyer of that beat, because for that you have to buy an exclusive beat, which is not the same as an exclusive license, but you will have many extra benefits.
There are more aspects to take into account, such as royalties, publications and copyrights, we will go deeper into this, as 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 exclusive rights sales and exclusive property sales.
When selling exclusive rights the producer remains the original author of the music, he can still collect publishing and publishing rights from writers.
When selling exclusive ownership, the producer sells the beat, including all interests, authorship, royalties…etc. These deals are also known as work-for-hire, basically the artist retains actual ownership over the beat, and from that point on will be considered the legal author of the beat. I would never contemplate this last option because it does not seem ethical to me this type of contracts, that each artist is respected for his work and his name is in each publication should be something obligatory.
You can continue reading about beats licensing or listen to my music by clicking on the button below.
Part 2. Royalties and types of rights in online beats licensing.
It is not easy to understand everything that is behind the music industry, too many contracts, beats licensing and very different legal agreements, but I will explain as best I can this aspect and for that we will start by understanding two forms of royalties:
1. Mechanical royalties, they are generated when music is distributed physically or digitally. Print sales, digital (Itunes) or streaming, e.g. Spotify.
2. Performance royalties, live performances, radio…etc.
Usually the artist keeps 100% of the mechanical royalties, whether exclusive or non-exclusive the license of beats he/she has acquired. Nowadays there are services like Cdbaby or Distrokid, which pay those royalties directly to the artist, if he is an independent artist. When the artist is on a label, those royalties are paid to the label and the label pays a percentage to the artist.
Sometimes, in exclusive beat licensing, the producer can ask for 1-10% in mechanical royalties, this is known as producer points or royalties. Years ago it was easier to sell instrumentals 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 the mechanical royalties. It is a way to protect themselves 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 he gets enough profit.
In this scenario the price an artist pays for exclusive rights is considered an advance against mechanical royalties, which could be enforceable in the future. It is calculated on the net profit of the song, which means that all 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 studio time.
3. $200 for mixing and mastering.
Total = $1,400
4. One year passes and the song generates $5,000 in mechanical royalties.
5. Net profit is $5,000 – $1,400 = $3,600.
6. The producer’s share is 3% of $3,600 = $108.
For an independent artist, $5,000 is a lot of money to generate in royalties, but still, it is only $108 that the producer earns.
Royalties from composers
In copyright law, a producer is also considered a songwriter. Songwriter royalties apply to all persons who have been creatively involved in the song, producers, songwriters and sometimes even engineers.
In general, non-exclusive beat licenses are sold with a 50% publishing and writer’s share. This is non-negotiable, since the musical part is half of the song and the other half are the lyrics, that half has to be divided between 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 %.
Performance royalties are collected and paid by performing 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, composer or writer’s share royalties, and publishing royalties.
The PROs 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 publishing royalties (the PRO pays it directly to the publishing company or publishing manager). In beats licensing it usually comes at the end of the contract how the distribution is done.
Unlike Songwriter or writer royalties, publishing can be assigned to outside entities called publishing companies. Most independent artists and producers are not likely to have a publishing agreement, which means they will have to collect publishing royalties themselves.
Surprisingly, there is a lot of money left on the table here. If you’re an independent artist or producer who is only registered with a PRO and not a Publishing Administrator, half of what you’ve earned is still waiting for you to collect.
In terms of online licensing, whether exclusive or not, the percentage of publishing rights is generally equivalent of the writers’ share. 50% of the writers’ share equals 50% of the publishing.
Songtrust can help you collect these royalties if you are an independent artist.
Part 3. Copyright, know what part you get when you buy beats licensing online.
It is complicated to understand and to explain, I recommend that if you are a serious artist, you consult all the doubts you have regarding copyright with a lawyer. Let’s talk about rights regarding licenses to try to understand who owns what.
Sound Recording Copyright (SR-Copyright)
When you create a new song, together with the producer, this is known as a 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 become his exclusive property, without any claim by the Producer. The only exception here is the Producer’s right 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 to a beat, you own the recording, sound and master rights.
2. If you have a non-exclusive license, you do not own the sound or master recording rights, you have only been granted the right to use the beat and commercially exploit the song depending on the terms and conditions of the non-exclusive license, however, they own the PA copyright of the lyrics.
3. The joint creation of the song will be called a Derivative work.
Performing Arts Copyright (PA-Copyright)
Imagine you go to a producer’s website and find a beat you like, purchase the license and make a song that you distribute through CDBaby or any other platform… The song has two copyright elements, music (producer) and lyrics (artist).
Regardless of whether you have purchased an exclusive or non-exclusive license. The producer will always own the copyright to the music and the artist will always own the copyright to the lyrics (unless it is written by someone other than the artist).
This is what we call performing arts copyright (PA-Copyright).
The instant you write something down on paper, bang out a beat on your DAW or save a demo song to your hard drive, you have copyright! and you don’t need to register anything to have your copyright to the work, although there are some benefits and it’s always better to have everything registered, you don’t lose your right for not doing so.
A remix, a Spanish version of an English song, parodies… These are new versions created with pre-existing copyrighted material. Speaking of licensing online beats, a non-exclusive agreement authorizes the artist to create a song (new version) with a producer’s copyrighted material (the beat).
The only person who can license a derivative work is the owner of the underlying composition. In this case, the producer.
Beats containing third party samples. Legal Beats Licensing
I don’t usually use third party samples and when I do, I have changed the original sound so much that the sample I’m sure is 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’s it.
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 problems with claims from people who inadvertently register the content id, I prefer to save myself these problems.
A common mistake is when producers who are selling beats with third party samples think they can pass the responsibility of “cleaning those samples” to the licensing artist. The author of the beat is responsible for the use of samples in his instrumentals.
Part 4. The mistake of stealing a beat from a producer and not having beat licenses
It does not happen once or twice, it is something common that being a producer, if you have an online store, you see that someone who calls himself an artist, use a beat of yours without buying the beat licensing to use, to create a song. When this happens, we can contact the artist and inform him about the improper use of the beat. We can also give them the option to buy a license or have the song removed from any platform.
Me, I don’t think we should waste our time warning someone who has used your beat knowing they couldn’t, because they even bothered to cut the watermark protecting the beat. My only option is to do a DMCA takedown.
Doing a DMCA takedown is when content is removed from a website at the request of the content owner or the copyright owner of the content. It is an internet standard widely used by website owners and internet service providers. In our case we have the right to process a removal notice to any artist who uses a beat of ours and publishes it on the internet, without having a license to use that instrumental.
If we see that the song is not gaining many views and has a poor sound, two factors that usually occur in this type of artists, it is best to let it go, you will save time and money. But if the song we see that it has enough plays, doing a DMCA takedown is the best option.
More information here: https://www.dmca.com