What is individual and collective licensing?
In some scenarios, individually license their and , and in other scenarios, they collectively license those together with other rights holders.
Individual licensing means rights holders directly license their musical works or sound recordings to . This type of licensing occurs, for example, between record labels and streaming services for the in sound recordings and between audiovisual producers and or for in musical works included in movies, TV shows, or video games.
Collective licensing means multiple rights holders jointly licensing their musical works or sound recordings, usually via a .
A CMO facilitates the licensing process and ensures that the proper payments are made to the rights holders. By obtaining a license from a CMO, the user can obtain the rights to use many musical works and sound recordings without having to contact each rights holder individually.
Collective licensing generally occurs where the costs of individual licensing, for both rights holders and users, outweigh the benefits of individual licensing because there are so many rights holders to contact and so many works to license, for example, when licensing the of musical works on radio or in bars and restaurants.
This is always the case for which can only be managed by CMOs, and sometimes when rights holders assign some of their to a CMO.
For more information about this, visit our page on CMOs.
What are license fees?
License fees are what the pays the in exchange for the right to use a musical work or sound recording. License fees are usually received by music publishers, , or CMOs, who then pay rights holders. Those managing the license will deduct their administrative and other costs before the remaining fees are passed on to rights holders.
License fees can be one-off or recurring payments over a determined period of time.
What are the basic licensing payment types?
Payments of music licensing fees can generally be made on a transactional or blanket basis. These payment structures can occur in either individual or collective licenses.
Under a transactional payment structure, fees are paid for each individual use of the licensed musical works and sound recordings. For example, every stream of a sound recording is counted and charged at an agreed rate per stream.
Under a blanket or catalog payment structure, fees are paid on a basis. For example, for an annual fee, the user may have unlimited uses of the musical works and sound recordings. It's commonly used for most collective licensing, for example, licensing musical works and sound recordings to radio and TV stations.
What are exclusive and non-exclusive licenses?
Exclusive licenses are granted to one licensee only, which means that the same rights for the same musical work or sound recording cannot be licensed to anybody else.
Non-exclusive licenses could be granted to multiple licensees, which means that the licensor can license the same rights to other users of the same musical work or sound recording.
For more information on licenses, visit the Common Music Industry Licenses page.
What are license periods?
License periods are the duration of a license. They are how long a licensee can use a particular musical work or sound recording. License periods can vary depending on the type of license and the agreement made between the licensor and the licensee. It can also influence the license fee.
Music license periods can be for:
Single Use: This type of license allows the use of a particular musical work or sound recording to be used once, such as for a concert or an event. Once the agreed usage takes place, the license expires.
Term-Based: This type of license is granted for a specific period of time, generally over months or years. During this time, the licensee has the right to use the musical works or sound recordings as specified in the agreement. After the term expires, the licensee must either renew the license or stop using musical works or sound recordings.
Perpetual: This type of license grants the licensee the right to use the musical works and sound recordings indefinitely.
What are license territories?
Licensed territories determine where a licensee can use a particular musical work or sound recording. Licensed territories can vary depending on the license type and the agreements between the licensor and the licensee. This could also influence the cost of the license.
Music license territories can be:
Domestic: this means the license is granted only for a single country or region where the musical work or sound recording is used.
Specified: this is when the license is granted for various countries or regions where the musical work or sound recording can be used.
Worldwide or global: this means the musical work or sound recording can be used anywhere in the world.
Musical works and sound recordings can be licensed or sub-licensed to different parties, such as a who sub-licenses the rights to another distributor for a specified country or region.
This means there are often many rights holders and licensors of the same musical work or sound recording, so it is very important to register musical works and sound recordings with all the correct information and to keep it up to date.
Learn more in our topics on Songwriter Splits and Getting Credited and Paid.
What are compulsory or statutory licenses?
A compulsory license, sometimes called a statutory license, allows certain uses of musical works or sound recordings without express permission from the rights holders but against payment of remuneration.
Most countries have established compulsory or statutory licensing systems for certain types of uses of musical works and sound recordings without needing to negotiate a specific license with the rights holders, typically for mass uses for multiple musical works or sound recordings.
These licenses still require that licensees pay fees to rights holders via a CMO, with those fees usually negotiated collectively or established by or .
These licenses are referred to as compulsory or statutory because, unlike exclusive rights, they are set by law and do not allow rights holders to prohibit licensees from using their musical works and sound recordings. Rights holders are instead only entitled to receive remuneration when their works and sound recordings are used.
Examples of compulsory or statutory licenses in many countries include mechanical licenses and some public performance licenses.
The rules applicable to compulsory or statutory licenses vary from country to country. Always check with the local Copyright Office where the musical work or sound recording is used.
Head to our Common Music Industry Rights page to learn about your rights.
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Image credit: Martin Fabricius Rasmussen