Most Favoured Nations
Continuing my series of blog posts which decode the jargon you may hear when working on sync licensing projects, today I take a look at Most Favoured Nations. In this instance this is not an entente cordiale agreement between different countries (originally the term refers to trade agreements between different states) but instead an understanding between key players within the music rights owner community.
Sync Licensing: What Does Most Favoured Nations Mean?
If you’ve followed my earlier blogs, you’ll know that for every music title there are separate rights in the song/composition (“publishing rights” – usually controlled by music publishers) and sound recording (“master rights” – usually controlled by record labels) each of which have to be cleared with the respective rights owners.
For a music title whose songwriter(s) and the artist are the same people (i.e. an artist who writes their own songs), their respective music publisher(s) and record label will almost always expect the same level of sync licence fee for their respective rights in that title. This expectation is formalised by the MOST FAVOURED NATIONS (“MFN”) custom & practice.
MFN is a price equalisation device used by record labels & music publishers to revise licence fees upwards (but never downwards). If the publisher quotes £10K (MFN with “master”) for a given usage and the record label quotes £8K (MFN with “publishing”) for the same usage, the record label’s fee will rise to £10K to match the publisher’s fee if the deal goes ahead.
The MFN provision will be written into the long form sync licences, so if you don’t disclose the difference during negotiations, you’d be knowingly breaching the licence terms if you didn’t subsequently disclose it on signature.
Some people claim that MFN is anti-competitive as it can be viewed as a form of price fixing between different suppliers. We don’t believe that’s been tested in a UK court, but the practice is deeply embedded within music rights owners acting in the sync market – it is fiercely protected so you need to be aware of its existence.
MFN can sometimes be waived where a lesser known artist records (or “covers” as it’s called) (1) a well-known song or (2) a lesser-known song written by a well-known songwriter. In these instances, whilst the music publisher might demand a high fee for the song, the artist’s record label MIGHT be willing to waive the MFN provision and thereby accept a lower fee than the music publisher. This varies from label to label; some labels will waive MFN, some won’t; often it’s down to company policy.
GOT ALL THAT? If not, you need Resilient Music’s help! If you’re wondering where to start, who to call and whether you feel confident in handling sync licensing; perhaps your first phone call should be to us at Resilient Music. We have years of experience in the music rights industry, and know all the jargon!
Any questions? I’m always happy to answer any questions about music rights procurement, so drop me a line in the comments box below, or pick up the phone and call +44 (0)20 3137 0324.