I’ve been fortunate to have worked with ISBA for many years, advising their members on music rights licensing. I was kindly invited to address ISBA’s Compag whose members are drawn from the marketing procurement community. On 1st December, I presented my findings from a survey on current trends in music licensing.
Music Licensing: What’s Going On?
To establish the key trends in music licensing, I conducted a survey with two simple questions:
- Which current trends are improving the music licensing market?
- Which current trends are damaging the music licensing market?
Who Are You?
I posed the questions to three key industry groups:
(a) Music Rights Owner aka Licensors
- Music Publishers
- Record Label
(b) Music Rights Users aka Licensees
- Brand Advertisers
- Advertising Agencies
- Music Supervisors – who research & find music tracks, acting for licensees
- Music Clearance Specialists – who clear sync rights, acting for licensees
- Sync Agents – who promote tracks & clear sync rights, acting for smaller licensors & artists
Most people I approached preferred to discuss their thoughts by phone rather than respond in writing. All replies were treated in confidence and no respondents were named.
We Can Work It Out
I sorted the responses into four categories to identify if a trend was positive or negative to licensors and licensees.
Here’s what we found:
(1) Win Win
Positive for Licensors
Positive for Licensees
(a) More Music Available
An explosion of platforms allows artists and rights owners to distribute music globally at minimal cost. This makes discovery easy for brands and agencies.
(b) Better Metadata
Music files are tagged with increasingly descriptive terms which aids search. Most music rights owners have sophisticated engines allowing music users to mine their catalogues to locate the perfect track.
(c) Better Measurement Tools
Tools such as E-Poll, Q Scores, Google Analytics and Davie-Brown Index support brands’ understanding of consumer engagement. This can help brands overlay the values of their target audience with those of a specific artist’s fan base.
(d) One-Stop Licensing
Increasingly, independent music rights owners are representing both the songs and recordings of one artist. This simplifies the licensing process where ordinarily brands and agencies deal with separate music publishers and record labels.
Although most rights owners insist on manual negotiation of sync licences for brand campaigns, elsewhere there’s greater automation. Providers such as Rubblefish and Audio Jungle offer automated high volume / low value licence solutions for amateur, semi-pro and low level B2B online video.
(2) Win Lose
Positive for Licensors
Negative for Licensees
(a) Online Licence Fee Inflation
Music licence fees for online video have risen to match those for broadcast campaigns. As brands divert media spend from TV to paid-online, music rights owners seek to make up the shortfall by adapting their pricing strategy. Furthermore, licensors increasingly insist that online campaigns are geo-locked to the target markets, necessitating a sole upload to a YouTube Partner Channel and that link embedded on all other platforms.
(b) Here, There & Everywhere
An explosion of social platforms offers brands the chance to segment and target audiences and so serve relevant content. For music rights owners, this represents an increase in media reach, so they further inflate licence fees – in line with point (a) above. This challenges brands who allocate far lower budgets for social than ATL campaigns.
(c) “Up & Coming” Artist Rebrand
Record labels often have a low strike rate when signing artists. For every success, there could be half a dozen or more failures. These “failed” acts have un-recouped royalty accounts, meaning that the advances paid on signature have yet to be earned back. Some less scrupulous labels try to repacked such acts as “up & coming” to agencies and brands when in reality they’ve already been & gone.
(d) Conflict Of Interest
Look at the description of Intermediaries at the top of this blog post. Sync Agents act for artists and licensors so it’s fair practice for them to charge commission – their role is to secure the highest fee. In contrast, music clearance specialists act for licensees, so their role is to secure the lowest fee. Compensation by commission offers a disincentive for clearance specialists to negotiate hard on fees, hence it’s a conflict of interest. However, this is the prevalent business model for most outsourced suppliers engaged by advertising agencies.
(e) Onerous Licence Terms
US Agencies reported how US record labels are increasingly transferring risk from licensor to licensee in their template agreements. This includes the responsibility for sample clearance and an insistence that all fees paid to non-featured artists (session musicians & backing singers) match union rates, whether or not they’re union members.
(3) Lose Win
Negative for Licensors
Positive for Licensees
(a) Cost Controllers
Several sync agents complained that cost controllers were increasingly suppressing music licence fees by benchmarking rates. In the music industry, there’s a common belief that every song and artist is unique and so can’t be commoditised on a rate card. To a cost controller, this seems anarchic and hence the need to impose rationale on pricing.
Re-recording an existing song allows brands to avoid the licence fees paid to record labels for the original artist recording. Of course the music publisher that controls the song must still be paid, and often they inflate their fee for re-records. However, there is still a savings opportunity. Naturally, record labels deplore this practice.
Emerging unsigned artists are generally very keen to have their music used in brand campaigns. The past stigma of “selling out” has long gone. Unsigned repertoire is often available at a fraction of the price of material controlled by record labels and music publishers. It’s easily found through platforms like Bandcamp, Soundcloud and Richer Unsigned.
(d) Assignment Of Copyright
The longstanding UK business model for bespoke music is for the supplier to retain all rights. However, increasingly smart brands are taking an assignment of copyright in music which has been commissioned specifically for a brand campaign. This offers complete flexibility of use, no re-licensing fees and an on-going royalty stream.
(e) Price Erosion
Sticking with bespoke music, several publishers complained that composer demo fees had fallen dramatically, in some cases to zero. This is a natural function of an over-supplied market in which the barriers to entry are very low. That said, paying demo fees within a competitive pitch environment can encourage greater effort & engagement from the composers involved.
(4) Lose Lose
Negative for Licensors
Negative for Licensees
(a) Lack Of Mutual Respect
Each side complained that the other side didn’t understand or respect their position, needs and challenges. This is the root of most problems within music licensing for brand campaigns.
A perfect illustration of lack of respect are sound-a-likes. A deliberate attempt, usually by an advertising agency, to copy the song they wanted to use, but could license due to consent denial or unaffordable fees. Typically the agency commissions a composer to create a piece that’s “just close enough not to get us sued”. Often the agency engages a musicologist to advise on the composition to mitigate risk. Understandably, music publishers loathe this practise and may launch legal proceedings for copyright infringement.
(c) Lack Of Clarity
Music rights owners complained about lack of clarity in both creative music briefs and required usage when approached by agencies or music supervisors. This prevents licensors pitching relevant tracks, and clearing the usage needed. For licensees, it’s an inefficient way to find music and exposes the brand to copyright infringement if licences don’t match the actual use.
(d) Speed Of Response
Brands & agencies complained that music rights owners took too long to respond to licence requests. Rights owners complained that brands & agencies left music to the last minute and didn’t appreciate the long approval chains for securing artist and writer consent. This mismatch of expectations remains a very common cause of friction.
(e) Inexperienced Music Supervisors
The music supervision business is completely unregulated. Anyone can claim to be one. Music rights owners complained that many music supervisors secure assignments by “being best mates” with someone within an advertising agency. Whilst these supervisors may have great taste in music, they often don’t understand music copyright or the licensing process. This greatly frustrates music rights owners and exposes agencies and brands to risk. To tackle this problem, moves are afoot to establish a UK branch of the Guild Of Music Supervisors which will set professional standards and ensure that brands and agencies are properly served by suitably experienced and qualified experts. I am fully supportive of this development as the business of complex rights negotiation needs to be handled by those who understand it.
Want To Know More?
If you have any questions about this survey, please get in touch:
Call me on +44 (0) 20 3137 0324
Email me on firstname.lastname@example.org
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