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Hollywood Production Music » Production Music Industry Articles & Tips » Music Libraries Business

Music Libraries Business

Music Libraries - Business model

Production music libraries typically rely on two main revenue streams:

License / synchronization fees: Fees paid upfront to the library for permission to synchronize purchased music to a piece of film, video or audio. These fees can range from a few dollars to thousands depending on usage type (a network commercial usage for example is much more expensive than using purchased cue as corporate presentation music). The fee can also vary according to the number of copies of the product in which the music was embeded (for example: most basic license fees allow for up to 1000 copies or so, whereas using a licensed cue in a video game which is expected to sell hundreds of thousands of copies will cost much more). Some libraries split these fees with the composer of the music. A library might also contract a composer with a work-for-hire fee paid upfront for composing the music, thus waiving his/her share of any future license fees.

Royalties (Performance income / performance royalties): Performances income is generated when music is publicly performed - for example, on television or radio. The producer of the show or film that has licensed the music does not pay these fees. Instead, large fees are paid annually by broadcasters (such as television networks and radio stations) to PROs (performing rights organizations) such as ASCAP and BMI (in the US), who then distribute income among their members (the composers or their representatives). CUE Sheets are filed by the customer that has licensed the music then sent to the performance societies who use them to allocate income to their members. This process is far from precise, but all sides usually try to keep everything in order and document cue sheets. The composers then receive a periodic report and payment from their PRO.

Here are some more terms and definitions to help you further understand how it all works:

Royalties: The payment an artist receives when someone uses / airs their music (in legal manner). When you pay royalty fees, a portion should be transferred back to the person, who created the original work, usually by the PRO with which he is signed.

Royalty-Free: A business model assuring the purchaser that after an initial fee which he must pay to use a selected piece of music, no further royalty payments are required for additional uses.

Needledrop Licensing: The purchaser pays only for the music that is used, on an instance-by-instance basis.

Production Blanket: The purchaser pays one fee based on the production, allowing for multiple "needledrops".

Blanket Licensing: Allows the purchaser to use all the music in a defined collection without having to pay a fee each time one of those songs is used. Resembles a subscription fee.

In Perpetuity: If you buy the rights to use a piece of music "in perpetuity," it means you own those rights (forever). So, if you bought the rights to use a minute of a specific song in your closing credits in perpetuity, it just means that you won't have to re-up the agreement after a certain amount of time to continue using it.

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