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Convergence

April 27, 2010

A frank discussion of the blurring line between “License” and “Royalty Free” production music.

Twenty years ago, all music libraries were “License” – i.e., they only offered music on a Needledrop (or per-use) basis, or by Annual Blanket. Around 1990 “Buyout” or “Royalty Free Music” libraries appeared.  This was before the internet allowed for individual track downloads, so these libraries sold CDs along with a license that allowed for unlimited usage for a single, onetime fee.  These libraries caught on in the lower levels of the market, and, as the internet blossomed, with younger producers growing up with fast (and often free) music downloads.

When I started the Manchester Music Library in 1993 we only offered traditional licenses.  But I had only three CDs, and grew from there at a slow rate.  It was difficult to compete with music libraries with thousands.  I began offering CDs on a buyout basis, charging top market prices, and limiting what could be done with them, while still offering traditional licenses. As the library grew many customers found the Annual Blanket a better deal than buyout, but I let them choose. Straddling both worlds worked for me, but apparently not for many others. Only two other music libraries joined me in operating that way.

The number of libraries was already growing, but when internet music mp3 downloading and download royalty free music became practical, it exploded: anyone with some music tracks could put up a cheap website, and didn’t need to bother with the expense and hassle of making CDs. Presto! – another music library.  For some reason, my dual strategy did not catch on. The vast majority of libraries where still either old-school License, or Buyout, and rarely the twain shall meet.

Recently, however, I’ve noticed many things that suggest that the two worlds are converging.  And perhaps it’s not coincidence that this started happening around the time that “Buyout” assumed the new name “Royalty Free Music.”  This new term is apparently very popular.   But if its purpose is to distinguish between buyout and license libraries, it’s peculiarly inapt. Because a “Royalty Free Music” library is no freer of royalties than the other kind. Once a piece of music is synchronized, neither kind of library charges any musician, composer or publisher royalties (the exception is a few old-school libraries who may still charge commercials on a 13-week basis.)  On the other hand, the vast majority of music libraries of either stripe collect performing royalties – from ASCAP and BMI (and occasionally directly.) Clients other than Radio and TV stations never pay a dime for performing rights no matter which kind of library they use.  Perhaps in taking on what seems to be a more attractive name, Buyout libraries have inadvertently pointed out that there isn’t nearly as much difference between the two as people think.

And the differences keep narrowing. From the Royalty Free Music side, I’ve noticed a number of companies that once offered All Rights for one price adding on surcharges for things like the number of copies made, market size, or number of end users. Some  have added so many qualifications that many track downloads are in effect single use – i.e.,  Needledrops, though they will never call it that, because the Buyout industry has built itself to a large extent on fears of that very thing.  What led to these surcharges in some cases was library owners who were also composers. One had sold a track for $40 for use in a video game which sold in the millions. The other saw the piece he’d sold for a modest fee used on a major corporation’s website for ten years running. They understandably felt the unfairness of this. Now they charge more for certain applications.

What’s more surprising to me is what’s happening on the license side.  One major library is now offering a corporate annual blanket, which rather than limit the client to a set of CDs, as is traditional, limits them to a number of downloads from the entire library.  This is remarkably similar to the “subscription” program of one of the large Royalty Free music libraries.  And though their terms are apparently different, customers could not be blamed for starting to get confused about what’s what. Another large library offers music track downloads on a “per use” basis – except that nowhere on their website do they offer a mechanism for relicensing the pieces. Perhaps this is an oversight, but I wonder if it isn’t a coy way of horning in on the Royalty Free music market.

And if so, good for them.  Shortly after I decided to offer my CDs on a Buyout basis, I told a representative of one of the most prestigious of the old school libraries. She was incensed, giving me a version of the old “you’ll never work in this business again.” Her anger is understandable – Buyout threatens the old order of licensing.  In a sense I am no longer “working in that business.” That business doesn’t quite exist anymore.

I began to offer my music on a Royalty Free basis out of necessity; I know a number of talented composers who started their own Buyout libraries because they were tired of waiting for big license libraries to get around to listening to their demos.

Speaking as a library owner, however my customers are most comfortable buying my music is the way I want to sell it to them.  We sell Annual Blanket, Per Use and Royalty Free licenses. For info on their relative merits you can consult our FAQs.

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