Understanding Beat Licensing

Beat Licensing

Understanding the Business of Beat Licensing

Over the last several years, online beat licensing has become the new trend in music making, specifically for hip hop and rap artists, vocalists who want to make a name for themselves without a backing band, and for producers looking to make an imprint in the world of music. Sites like Soundclick, MyBeatshop, Beats Planet and others are paving a road for emerging producers to get heard while giving both aspiring and major league artists the tracks necessary to lay down rap lyrics, songs and hooks.

Licensing of beats isn’t a new process, but with more do-it-yourselfers out there, as well as more musicians looking for high quality beats, the language behind these agreements can be extremely intimidating to those new to the game.

What is a “Beat”?

“Beat” is a generic term for what we define as the skeleton of a potential song. Typically including a drum loop, synthesized bass and other textures, it creates the essential structure for  a song, usually leaving room for hooks, lyrics and bridges. When a band writes a song, they structure the song as they go, so as to create a flow that feels right to the end listener. Without a lyricist and full band putting the entire thing together, creating a beat is a challenging pursuit and requires in-depth knowledge and instincts when it comes to “what makes a song work.”

A “hook” is generally the chorus of a song; the part that gets stuck in your head. Think of 50 Cent’s “In Da Club,” and the refrain “Go shawty/it’s your birthday/we gonna party like/it’s your birthday.” A track is considered “hooky” if it’s got an irresistible hook portion of the production that is immediately recognizable as that song from that particular artist. Some hooks – think Carly Rae Jepson’s simple but effective synthesizer on “Call Me Maybe” – become iconic and are recognized in an instant by the listener.

Basic Agreement Terminology

You need to be aware of the basic terms affiliated with this sort of business transaction.

If you’re buying a beat, you’re the licensee, or sometimes simply the “buyer.” If you’re selling a beat, you’re the licensor, or “seller.”
Beyond that, there are two different types of licenses that are offered: Exclusive, and Non-Exclusive.

Non-Exclusive License

Non-exclusive licenses give you the rights to use the master recording beat to create a song with your lyrics, raps, choruses, etc. Understand that the producer or the songwriter still retains copyright ownership of the beat. You also need to know that the licensor has the right to license the beat to whomever he wants until the beat is purchased with an exclusive license.

“But wait,” you’re saying. “If I buy a non-exclusive license, record my rap or song over the beat, and then the producer sells an exclusive license to another artist, what becomes of the work I put in on my song on the non-exclusive track?” Good question. When you record your lyrics, choruses, etc., you have created a derivative work of the song. In the majority of agreements, this is generally not entirely clear. Essentially, this means that you own the copyright to the work that you completed on the beat you licensed, but do not hold any copyright claim to the original music contained on that beat. As a newly created derivative, the song you’ve just developed with the beat you licensed is a new work, separate of what you licensed from the producer.

Some websites which sell beats and tracks place limitations on how many derivatives you can use with a non-exclusive license. For example, if you are given permission for one derivative (such as recording lyrics or a vocal track), then you may not be able to record any other derivative material without another license.

Generally, non-exclusive licenses also have limits on how many units you can sell. We’ve seen numbers range between 500 and 5,000 units sold on a non-exclusive track, so if you have high aspirations, you may need to adjust and use an exclusive license.

Exclusive License

If  you’re serious about a certain beat and want to have ownership of the entire sound recording, getting an exclusive license is the way to go. Normally – and we add the qualifier because not all beat companies are the same – an exclusive license will give you full control over the entire sound recording, without worrying about the number of derivative works you make or the number of units sold. You can add different elements to the recording itself, record as many vocal tracks as you wish, and create as many derivatives as you want. And as an added bonus, you have the opportunity to sell as many copies as you wish.

There are exceptions, of course. You should know that producers differ in how they define exclusive, and just because you have exclusive rights to the master doesn’t mean you have exclusivity to the composition. Often, if you had the opportunity use the song in an audio/visual aspect, then you would have to negotiate a synchronization license with the original writers as well.

Sometimes, licensors will not let you re-sell or re-license the master to another entity, such as a record company or producer, without their express permission, and most producers will want to be given credit for the original.

Master Vs. Composition: The Confusion Sets In

What we’ve found in a good number of beat agreements is the lack of separation or clarity between the master recording and the composition. These two terms create the most ambiguity with regard to beat agreements, because both the composition and master use rights are blended into one, making it tough to comprehend which is which. For example, some produceers will refer to the master and the composition as the “song,” in their exclusive agreements, when in essence, they are referring to the master, or the actual audio of the song itself. Remember: the song (composition) and the master (the sound recording of that song) are two different things; tread lightly when establishing your rights.

Because of this ambiguity, what is outlined in most agreements is a combination of the sound recording and the composition. Such provisions include the writers percentages, synchronization limits based on additional licenses, performing rights, registration requirements, and indemnification, which protects them from liability.

Negotiating the License

Everything in this world is negotiable, and licenses are no exception. It is possible to customize agreements; however, you should have full understanding of what you are asking for. For example, it is possible to negotiate an exclusive agreement that places limits on some of the rights that the licensor has over the master. It all comes down to what you’re looking to gain out of the track, and how much the licensor is willing to budge on terms.

Of course, this is complicated by a lot of sites demanding payment for the beat before they send you the agreement; you’re fully within your rights (and would be very, very smart) to ask for the agreement first to make sure you’re getting what you paid for. It’s also recommended that you give the agreement a good, hard look before signing or sending your money. Many sites put their agreements up on the public side of things so you can have a look before signing. Just make sure you do your due diligence and explore every possible avenue when it comes to licensing a beat.

If you want to customize the agreement, do that first and get a buy-in from the producer or licensor before you proceed. Once they commit – we recommend getting that commitment via email, so there’s an existent paper trail you can fall back on should anything go awry – then you can submit payment.

If you want to negotiate terms and are serious about getting an exclusive license on a certain beat, you may want to secure the services of an entertainment lawyer.
Much of the time, customized deals are not mentioned on these sites, and agreements are referred to as “standard,” which is funny given the nature of legal documents in general; there is no “standard” for anything.

Once you submit payment and they give you access to the beat for download, that creates what is called “consideration” in a contract between you and the licensor.

The Bottom Line

Choosing which license will work best for you depends entirely on what you are trying to achieve with the beat. The licensor is going to keep licensing the beat as a non-exclusive until someone ends up licensing the exclusive, at which point it will no longer be available. So if you’re looking to take ownership of a beat and really make it your own – complete with unlimited derivatives and opportunities to make the beat what you’d envisioned – you need to obtain the exclusive license. There may be a lot of others who already have access to the non-exclusive license, thereby cheapening your brand as an artist if others have a similar derivative.
As with all things on the Internet, there’s a lot of good information and a lot of bad information. Knowledge is power, and we suggest studying the basics of copyright law and general licensing points to command a greater understanding as you move forward in this business.

Best of luck!

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