You might assume that when you broker a sync licence for a song or recording, particularly for a high fee, you’re automatically protected from competitors using the same music. That assumption would be wrong.
Virtually all standard sync licences for commercial catalogue titles are non-exclusive meaning that your direct competitors can run simultaneous campaigns in the same markets with the same music.
So, how do you protect yourself? The answer is to add a level of exclusivity to the deal, but of course this comes at a cost. The following graph explains this point.
(i) Single product category
Let’s say you’re in the marketing team for Johnnie Walker whisky. You’re negotiating a sync licence for a music track and want to prevent competitor whisky brands using the same music. Assuming you’re able to secure clearance for the track you want for use by an alcoholic beverage brand, then exclusivity within the whisky category would be classed “single product category”.
It’s wise to negotiate an option for single product category exclusivity based on a percentage uplift on the non-exclusive licence fee. You might want to offer a 25% – 30% uplift but the rights owners could counter-offer at 50% or even higher.
Should you agree terms and exercise the exclusivity option when the deal commences, it’s important to remember that exclusivity is limited to:
- Licensed Term (or extensions thereof) i.e. duration of licence
- Licensed Territory (or “markets” in your language)
- Licensed Media (or “channels” in your language)
If you’re only running a UK TV campaign for 6 months, you’re only protected in the UK, for that 6 month period, and just for TV. you’ll have no exclusivity before the campaign starts or after it ends.
Key Point: Online
There’s a general exception to exclusivity that catches out many marketers. Almost all music rights owners will refuse to grant any exclusivity for online usage. So, even if you manage to secure exclusivity for an above-the-line usage such as TV, the online element of your campaign won’t have the same protection.
(ii) Multiple product category
Keeping with the Johnnie Walker example, you might want broader protection covering all alcoholic beverage brands, not just whisky. Many music rights owners will refuse to grant this as the alcoholic beverage sector is a heavy music user and hence a strong revenue source. The perspective of music publishers and record labels will always be, “why should I grant this protection and jeopardise income from other campaigns?”
The only answer is of course a very significant uplift on the non-exclusive sync licence fee to justify what music rights owners will see as a gamble. As a marketer, you can expect to pay an uplift of 70% – 150% for multiple product category exclusivity over and above the non-exclusive licence fee.
(iii) Songs versus recordings
Marketers often ask, “Do I need exclusivity for both song and recording?” It’s a good question; you need to consider this:
Song
Exclusivity for the song will, by default, also cover any sound recordings of that song.
Recording
Exclusivity for the recording, will only cover that specific recording of the song. what should you do?
If you’re licensing a track where the songwriter and artist is the same person, both publishing and master sync licence requests will probably be sent along the separate approval chains to one manager. That manager will therefore have visibility of both deals. If there’s exclusivity in the publishing licence (with an applicable uplift in fee), the manager will demand the same for the master licence. In other words, absolute parity between the two licences, which is known as Most Favoured Nations or “MFN”.
If you’re licensing a well-known song covered by a less established artist, the position is rather different and more complex. In these situations it would be wise to seek advice from a suitably qualified expert.
In summary…
Exclusivity is not automatic, you sync licences granted by music rights owners are non-exclusive by default.
Exclusivity:
- must be negotiated in advance as an add-on to the main licence
- will almost always command an up-lift on the non-exclusive licence fee
- will be limited to the licensed term, territory and off-line media
- will almost always exclude online media
- may be granted for direct competitors in a single product category
- may be granted for indirect competitors in multiple product categories
- is very rarely granted to cover all advertised brands
If you need assistance negoitating sync licensing deals, advice for negotiating exclusivity or would like to discuss any of the above in more details – please get in touch. Call +44 (0)20 3137 0324 or email hello@resilientmusic.com
The above blog post is an extract from my book Music Rights Without Fights. If you don’t want to wait for the next extract to find out more about how you can negotiate sync licences smoothly, click on the link below.