Licensing, Performing, and Pressing Play
Elvis has left the building. The lights on the 3-tracks RCA console have gone dark, and the 2" master tape reels have been taken to the factory, where they'll be transformed into 7" vinyl records for sale. Multiple forms of intellectual property have been created. It's time to start using them.
You might be surprised to know that Elvis didn't write "Heartbreak Hotel." It was written by Mae Boren Axton (aka "Queen Mother of Nashville") and Tommy Durden. Elvis did manage to get a songwriting credit, but many believe it to be a vanity credit. These 3 songwriters are the technical owners of the composition. RCA Victor Records is the sound recording owner, and Elvis Presley is the performing artist for the sound recording.
Fast forward to 2015. You own a boutique digital streaming subscription service, one that serves exclusively Elvis music. In order to allow your listeners to press play on "Heartbreak Hotel," you must obtain 3 different licenses:
- a license to use the sound recording (specifically, Elvis' performance)
- a license to reproduce the composition (known as a "mechanical license")
- and a license to publicly perform the composition ("public performance" constitutes any exhibition of the song - radio, live shows, or even on the speakers at Steak Shack).
Each license is an agreement to pay the rights holder an arranged amount of money fo the use of their intellectual property. Obtaining these allows Elvis Music Service to run, but only for streaming on-demand. There are other licenses that are needed for other uses of music. For example, licenses also must be obtained to attach music to moving pictures (a synchronization license), and to publish a composition's words and notes on paper (a print license).
Each of these rights is owned by a combination of Elvis, Axton, Durden, RCA and various third parties (more on that in a minute). Each expect a portion of the money earned from the use of their contribution to the work.
In addition, every different kind of digital music use (streaming, downloads, radio, movies) requires various combinations of these licenses in order to be legal. Some licenses are even granted by copyright law (called "Compulsory Licenses")., with pre-determined royalty rates.
In short, using music for any commercial purpose requires a litany of license acquisition from the owners; and that doesn't even begin to cover payment.
Part 3 - Payments
Labels, Publishers, Societies, and Performing Rights Organizations
Paying labels for sound recordings is relatively straightforward. When the recording of "Heartbreak Hotel" is used, RCA Victor (now simply RCA) Records is paid for their ownership of the sound recording. Sound recording royalties are delivered on almost every use of a song.
But what about the composers, lyricists, and songwriters? How do they get paid when their compositions are reproduced on CD, played on the radio, digitally streamed, or otherwise used? In our example, payment comes from mechanical licenses (for compositions), and public performance licenses.
|Dennis Brown and Bob Marley|
In theory, the Presley-Axton-Durden trio could have managed the right to the composition by themselves and act as their own publisher. Acting as your own publisher can be time-consuming and confusing, so most songwriters and composers opt to be represented by a publishing company like Warner/Chappell, BMG Chrysalis, Kobalt, Sony/ATV, and others - companies that promote the composition and ensure songwriters and composers get paid when their compositions are use.
To be continued........
Glen Sears is Editorial Content Manager at MediaNet