Saturday, October 01, 2005

Creating Value By Licensing

So, someone wants to use your song in a TV Commercial. What now?

A fair price for a one-time license for a non-hit song from a no name is: whatever the artist is offered, or whatever your agent can negotiate without alienating the interested party. If the song has extended uses, other offers will follow. That's how you make money on licensing.

Songs –or anything for that matter– do not have any value until there is a market for them. You need to create a market. Like anything else, one accomplishes that by selling below cost and undercutting any potential competitors, which allows you to gain traction, publicity and some leverage on subsequent deals and transactions.

If a big agency knocks on your bedroom door and wants to use your song on a commercial that will increase your exposure, and which will also give you a platform to further market yourself –and if you are currently an unknown– don't mess it up by listening to a 'pal' who says your genius is worth more than what the offer is.

I can't tell you how strange it is to me that an unknown artist will give away their entire catalog on the Internet, but then claim it has extraordinary economic value the first time someone expresses interest in licensing a tune.

The prudent thing to do is to go with a reasonable* license for the present, and if the song is as catchy as your mother thinks it is, then other offers will follow (which is where you'll negotiate an ever escalating rate for your material, because now you have value).

*Reasonable means: Non exclusive use or limited exclusivity, for a limited time, in limited media; such as, 12 months for a designated TV/Radio/Internet Campaign, with an option to renew at the same rate, or a rate to be negotiated in good faith.

By the way, if the placement is for the theme of a TV show rather than for a TV or radio commercial, you can expect an equally low fee. Unlike advertising, however, the publishing on a hit show, especially if it goes into syndication will likely make any sum you negotiate very much worth your while. Even established composers scoring an original theme for a piece of TV entertainment will accept a low 'front end' figure betting on a series of fat paychecks on the back end. If the show gets knocked off the air you'll still end up with a bit of work you can use to promote yourself further.

Subsequent interest in your work –if there is any– will enable you to negotiate better terms as you establish a track record.

While it is unlikely several different advertisers will all want to use the same track at the same time in a given territory, sometimes they do. One piece of music can sustain simultaneous advertising licenses negotiated for use in different markets by industry or territory; and also win placement on a variety of entertainment projects, such as movies, games, TV shows.

A determined artist can certainly work the odds if they also learn how and who to pitch material to. But that's a career in and of itself. Do you want to be a music supervisor, or play guitar?

If you think of yourself less a performer and more as a composer, then one song –already favorably placed on a national campaign with a major advertiser– is a great way to introduce music supervisors with the rest of your catalog; and prospective clients in need of original music to your talent. Lots of music production companies were essentially built by one composer/writer who won a prominently placed track that he or she sold or licensed for next to nothing.

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