If you want to control future licence fee inflation, this post is a must read. When successfully employed, licence options can pre-determine licence fees for future extensions to Term, Territory, Media or Context.
Without them, any renegotiated fees for extra usage could look a bit like the graphic below.
(i) The benefits of covering all bases
The successful inclusion of options in sync licences allows you to future-proof commercial terms to cover campaign elements you may need but aren’t yet committed to. The benefit of options for brands is that:
- It commits the rights owner to “sell” you a licence extension at a specific price
- It doesn’t commit you to “buy” that extension unless you exercise the option
What is an option?
It’s a commitment by the music rights owner to extend the licence by term, territory, media or context of use within specific constraints for a specific fee.
How does the brand exercise the option?
Usually by a simple written instruction together with a purchase order (“Po”) for the relevant licence fee that must be paid before the option period starts.
Why don’t all licences include options?
- Music rights owners don’t want to grant options. They want you to renegotiate from a position of weakness that allow rights owners to substantially increase fees.
- Agencies want the work of renegotiation, as extra hours on the time sheet justifies their fees.
- Unless you negotiate options up-front, your sync licences won’t include them.
How do you know which options to ask for and how to negotiate them? This is a complex task for which you may need external expert support.
This is just a snapshot of how licence options fit into the music rights landscape taken from my book Music Rights Without Fights. To learn more about how to negotiate sync licence fees and for essential advice that will help you avoid the pitfalls along the way, get your copy here.
If you would like support negotiating licence options for a brand campaign, call me on +44 (0)20 3137 0324 or email@example.com