Buying or beats licensing has seen a popularity spike online in the last few years. 🤩 📈
That’s why I’m writing this Ultimate Guide to Online Beat Licensing – Buying Beats Online. Everything You Need To Know About Online Beat Licensing + FAQ 💯 ( I’m even here to help you 1 on 1, just ask)
Hey there, I’m Paul Cesar – your hip-hop beatmaker in San Diego, CA.
With an explosion of new people getting into the music scene, my experience selling rap beats online and testimonials from clients using my beats have urged me to bring you this official beat license buying guide.
Online beat licensing is not new because music producers are licensing their beats for several years now. Once what started with some producers on websites such as Soundclick, MySpace Songs has now become a huge music-licensing industry which is led by platforms like BeatStars, Soundee, Airbit.
Music production is not so easy to tackle and now maybe it is easy to make beats and launch a website to sell beats. but beat licensing is serious business still. In this article, we will discuss beat licensing and focus on the differences between Exclusive and Non-Exclusive Licenses.
Beat Licensing Explained
The concept of beat licensing is easy to understand. A producer first creates a beat and then uploads it to the beat store. Any person can buy these beats from this store and can use them for their songs. 🎵 🎤
The Producer Provides the Artist with a License Agreement
A document that will grant the artist-specific user rights to make and distribute a song. This license agreement is legal proof that the producer will provide permissions to use a certain beat. 🤝 📝
When a producer sends a free beat to the artist, this free beat is of no use because there is no legal proof or permission to use it. This is the place where the license agreement is useful. We will talk about beat licensing only in this article.
🤓 Is it your first time leasing beats? Check out my other article – From free beats to leasing beats.
Non-Exclusive Beat Licensing
Non-exclusive licensing, which is also called “leasing”, is the common form of beat licensing.
For $20 to $300, you can buy a non-exclusive license and then release a song on iTunes, Apple Music, Spotify, create a music video for YouTube, and earn income from it.
These are some license types also that are available from the producer’s beat store directly. In other terms, you don’t need to ask for them and you can buy a license from the online store immediately. (example from my beats store below)
Generally, a license agreement is generated automatically, including the name of the buyer, address, a timestamp (Effective Date), the user rights, and the producer information. With this license, the producer provides permission to the artist to use the beat for making a song and distribute it online. The producer is still the owner of copyrights and the artist will follow rights that are granted in the agreement.
The limitations of Non-Exclusive Licenses
Generally, non-exclusive licenses have a limitation on streams or views, sales, plays. For instance, the license can only permit a maximum number of 50,000 streams on Spotify or 100,000 views on YouTube. There is also an expiration date for the non-exclusive license. It means that it is only valid for a certain time.
This can last between 1 to 10 years. After that time, the buyer will have to renew the license. means buy a new one. The license will also be renewed when the buyer reached the maximum number of streams/views or plays. Even if license time is remaining.
Since these are non-exclusive licenses, a single beat can be licensed to an unlimited number of artists. It means various artists can use the same beat for a different song under the same license. A new artist is best with a non-exclusive license, while an artist or signed artist is best with an exclusive license.
Exclusive Beat Licensing
It means an artist can exploit his/her song to the fullest. There is no expiration date for the contract and also there is no maximum number of streams, plays, sales, or downloads. You can use songs in different projects like singles, music videos, etc. when compared with non-exclusive licenses, which are limited for use only in a single project.
In the case of purchasing the exclusive rights to a beat that was (non-exclusively) licensed to other artists, the artist that bought the exclusive rights is the last person to buy it. After a beat is sold exclusively, the producer is no longer permitted to sell or license the beat to others.
That does not mean the previous non-exclusive licensees will be affected by this. Each exclusive contract will have a section with a notice of outstanding customers involved and it will protect licensees from getting a strike by the exclusive purchasers. These are the differences between non-exclusive licenses and exclusive licenses. But it goes more than that and there is frequently confusion around the topics of rights and royalties.
Two ways of selling Exclusive Rights
For several years, producers were selling exclusive rights in different wats. Fortunately, now, contracts are streamlined and matching the standards.
Let’s discuss 2 ways of selling exclusive rights.
- Selling exclusive rights
- Selling exclusive ownership
By selling exclusive rights, the producer will be the original author still. And is yet capable of collecting writers’ share and publishing rights.
By selling exclusive ownership, the producer sells the beat involving all interest, authorship, copyright, etc.
These deals are also called work-for-hire. Fundamentally, the artist retains usual ownership over the beat and will from that point on be considered as the beat’s legal author.
In the beat licensing industry, selling exclusive ownership is unethical, and also not compliant with Copyright Law in many cases.
Guide to Online Beat Licensing Part 2: Everything you should know about Royalties, Writers Share and Publishing Rights
This’s the part that many people struggle to understand. Mostly, because there are different deal structures in the music industry. No worries. By the end of this guide, you will know everything you want to know. Before we jump into this next section, we have to understand 2 kinds of royalties first.
- Mechanical Royalties
- Performance Royalties
- Mechanical Royalties
These are made when music is physically and digitally distributed or reproduced. This applies to hard-copy sales, digital sales (for example, iTunes), and streams (for example, Spotify).
These are made when a song will be performed publicly. This applies to when music is played on the radio, performed live, or streamed for instance.
Who gets the Mechanical Royalties?
In some cases, the artist is permitted to keep 100 percent of the mechanical royalties in exchange for the cost they pay for the license.
Irrespective of whether the license is non-exclusive or exclusive. Nowadays, distribution services such as TuneCore, CD Baby, and Distro Kid pay these mechanical royalties directly to the artist. That’s if the artist works independently. When an artist is signed to a label, the label collects the mechanical royalties and can select to pay it to the artist.
Advances against Mechanical Royalties in Exclusive Agreements
In most cases, the artist gets to collect 100 percent of the mechanical rights because this doesn’t apply. There is an exception to this, which applies to exclusive rights. Some producers can ask for a small percentage of the Mechanical Royalties in the exclusive agreements. It can be anywhere between 1 to 10 percent.
It is also called points or producer royalties. In this situation, the price that an artist pays for the exclusive rights is known as an advance against mechanical royalties that will be due in the future. It’ll be calculated over the Net Profit of a song. It means all costs that were paid to make that song, involving the exclusive price will be deducted first before the producer will get his share.
Why an Advance against Royalties?
It can be pointless, however, there is a reason why few producers prefer selling exclusive rights with an advance against royalties. Some years back, you could easily sell exclusive rights for anywhere between $2,000 to $10,000. These days, it is considered normal to sell exclusive rights for less than $1,000.
With all the competition and the beat market becoming more saturated, the costs have dropped and it has become hard to close four or five-figure exclusive deals.
But what if the song blows up?
What if a song generates lots of dollars and you sold the exclusive rights to that beat for less than $1,000? That does not sound like a fair deal, does it?
🎵 I go more in-depth here: “What happens if the song I made with a leased beat blows up?“
An advance against royalties can provide the solution. It is insurance for the producer in case the song blows up. It is something the artist has to concern about as soon as the song makes serious revenue. And even still, it is only 3 percent.
Who collects the Performance Royalties?
Performance royalties are collected and paid out by Performing Rights Organizations (PRO’s), like ASCAP or BMI in the United States or PRS in the United Kingdom.
These royalties are divided into 2 parts:
• Songwriter Royalties (A.k.a. Share of Writer)
• Publishing Royalties
For every $1 earned on Performance Royalties:
- $0.50 goes to Songwriter Royalties
- $0.50 goes to Publishing Royalties.
- The $0.50 Songwriter Royalties is paid to the songwriters directly by the PRO.
- The $0.50 publishing royalties are paid to a publishing administrator.
What are Songwriter Royalties?
The songwriter royalties also called the Writer’s share will be paid out to the credited songwriters. This’s the part that can’t be sold through an exclusive license, other than a work-for-hire agreement. It is wrong in the licensing beats industry online. In case you are getting confused; In copyright law, a producer is considered a songwriter too.
Songwriter royalties apply to anybody that had creative input in a song. Producers, songwriters, and sometimes engineers. Commonly, non-exclusive beat licenses are sold with 50 percent publishing and writers share. This’s not negotiable since the music part is the contribution of the producer to your song and is considered half of the song. The lyrics are considered the other half. It does not matter if there happen to be many songwriters that contributed to the lyrics. In that case, this 50 percent is divided between them.
Example Non-Exclusive beat licenses:
- 50% Producer
- 25% Writer 1
- 25% Writer 2
Due to an exclusive rights deal, a different split can be negotiated between all creators. It all depends on the cost and flexibility of the producer. Some producers sometimes agree to the following split.
Example Exclusive Licenses:
- 30% Producer
- 35% Writer 1
- 35% Writer 2
What are Publishing Royalties?
Unlike Songwriter royalties, Publishing can be assigned to outside entities known as publishing companies.
Many independent artists and producers will most probably not have a publishing deal, which means they will have to collect the publishing royalties themselves.
If you are an independent artist and producer that’s signed up with a pro and not with a Publishing Administrator, half of what you have received is waiting for you to collect. In terms of licensing beats online irrespective of an exclusive or non-exclusive license the percentage of publishing rights is the equivalent of the share of the writer.
50 percent of writers’ share equals 50 percent publishing share.
Guide to Online Beat Licensing Part 3: The Copyright Situation Who Owns What?
It is difficult a tricky topic. If you want to know the ins/outs concerning copyright, it is recommended to go deeper into Copyright Law using our friend Google or consulting a usual attorney.
Again, we will explain about copyright in regards to licensing beats online only. We are going to dismantle a song to its creators and copyright holders, hopefully making it obvious to you who owns what.
Performing Arts Copyright (PA-Copyright)
Let’s say you are an artist and you went to search for beats on YouTube. You found a beat that you like and you head over to the website of the producer. You purchase a license for that beat, write lyrics, make a song and distribute it via CD Baby, TuneCore.
That song has 2 copyrighted elements:
- The Music
- The Lyrics
The producer owns the copyright to the music as well as you own the copyright to the lyrics. Irrespective of whether you have purchased an Exclusive License or Non-Exclusive license.
The producer will own the copyright to the music and the artist will own the copyright to the lyrics (until it is written by someone else other than the artist). This’s what we call Performing Arts Copyright (PA-Copyright).
On a side note:
many people believe that you have to register the music or the lyrics with the United States Copyright office still, but the fast you write something on paper, create a beat in your DAW or save a demo song to your hard drive, it is copyrighted. Sure, there are benefits to appropriately registering with the United States Copyright office but, failure to do so does not mean you’ll lose ownership over your creation.
Sound Recording Copyright (SR-Copyright)
Back to that song you created. Together with the producer, you have made a new song. In legal terms, this’s frequently referred to as the Master or Sound Recording. Now, this’s where things cause confusion because the difference between an Exclusive or Non-Exclusive license plays a huge role here.
As an artist, buying beats from a producer:
If you have licensed a beat exclusively, then you own the master and also sound recording rights. If you have licensed a beat non-exclusively, you don’t own the master and sound recording rights. In an exclusive license, the Master’s rights are transferred to the artist or buyer and it will be their property, free from any claims. The exception here is the right of the producer to jointly claim the copyright of the so-called underlying musical composition. This’s what we call the PA-Copyright.
The producer is and will be the original creator of the music. With a non-exclusive license, the customer doesn’t own the master or sound recording rights in the song. They have given the right to utilize that certain beat and to exploit the song commercially that is based on the terms and conditions of the non-exclusive contract. Still again, they do own the PA Copyright of the lyrics. Instead, what they have made is known as a Derivative Work.
What is a Derivative Work?
In regards to beat licensing, a derivative work is a combination of an original copyrighted work in combination with the original work of someone else (the lyrics). You can see derivative works commonly in the music industry and you will see them on the daily basis.
- Translations (A Spanish version of an English song)
In beat licensing, the non-exclusive license permits an artist to make a new version, by utilizing the producer’s copyrighted stuff or material. The person that’s capable of authorizing a derivative work is the owner of the underlying composition itself. In this case, the producer. When somebody licenses a beat on a non-exclusive basis, they are exactly given the right to make a Derivative Work.
Beats that have 3rd party samples
You should pay close attention now because this’s where things frequently go wrong. A common misconception when producers are selling beats with samples is thinking they can turn the obligation of clearing the sample over to the artists that license the beat. Somewhere, sometime, somebody made a statement about this which is totally false. This’s make-believe and it cannot be more wrong.
Exclusive or Non-Exclusive license, what is best for you?
We have discussed the differences between non-exclusive and exclusive licenses. But, if you happen to be an artist, you can wonder which option is the best. If we ignore the difference in price then an exclusive license is the best option in all ways. But every person does not need it. Actually, a lot of artists are good with a non-exclusive license.
Let’s discuss your current situation…
- How many followers do you have?
- How many songs did you release to date?
- What is the number of plays or views you get on an average basis? (all platforms)
- What is your marketing budget?
- Are you getting financial aid from a publisher?
- Ask yourself that What can be the best option for the artist you are today?
Most artists are not willing to buy exclusive rights. And it is ok as well. if you’re a new artist and working on the first album to get your name out there. Why spend that much money on exclusive rights if you even don’t know if the record will get big?
It is great to get one of the high-tier non-exclusive licenses. More Preferably, the Unlimited Licenses. It will make you spend less, buy more licenses, release more music and build the fanbase until you will take that next step.
FAQ About Beat Licensing
I want to get a license for a beat that is sold by the producer already. Can I contact the exclusive buyer so they can sell me a license?
No, it is not an option. This is a common mistake that is made by artists that are (desperately) wanting to get a license for an already sold beat is, while thinking they can contact the buyer and buy it. All exclusive contracts state that the beat can’t be resold or licensed to the 3rd party in its original form. If they will do this, that will be a breach of the exclusive agreement.
Someone is wanting to buy a beat that I already sold and asks if I can make a similar one for them. Can I?
In this case, you should know the word ‘similar’. If it has the meaning of re-using parts of the already sold beat or replicating melodies that you utilized in that beat, then it is NO. You basically will ‘sample’ a beat that you already sold. Actually, you are creating a derivative work that you cannot do. But if it has the meaning of using a similar song structure or same instruments, still different chords, and melodies, then it is YES. You can do that.
I recently got a non-exclusive license. Now someone bought it also. What will happen to my song?
Nothing. Don’t worry. Your license will be still active for the agreement length or until you have reached the maximum number of streams or plays. The non-exclusive license agreement should have an “Effective Date” and an “Expiration Date”. The Exclusive contract with the buyer, which is called “notice of outstanding clients” would protect you from those exclusive buyers so that they cannot strike you.
My non-exclusive license is now reaching its streaming limit but I cannot get a new license because the beat is sold exclusively already. Will I take the song down now?
If the non-exclusive license has reached the streaming limits and you also cannot extend this license, then yes legally, you will take your song down. This is the reason why the Unlimited Licenses are a great option, as they have no streaming cap. But they are more expensive.
Some person released a song with my beat but did not buy a license from me? What is the best option for me?
Unfortunately, it happens many times if you’re a producer and promoting your beats online. You have many ways to go about this. The primary step is to contact the artist(s) and inform them about the unlicensed use of the beat. Then, give them 2 options.
- Buy a license so that they can keep the song online
- Or remove the song completely from all platforms
It is best if they will adhere to your request. But what happens if they don’t? For this, you again have 2 options.
- Leave it be
- File for a DMCA takedown
If the song is not gaining popularity or views and contains poor quality, it is best to leave it. It does not worth your time and money. The alternative is to file for a DMCA takedown and obviously, it will cost you some money.
I made a beat with another producer. How to split the publishing and songwriters’ share?
Collaboration splits are popular and common these days, still, there is no fast answer to this question. It relies on what terms you are collaborating on. If you collaborate with a producer and you will upload that beat to the beat store, the common split is 50/50. It will go for sales, publishing, and songwriter share. When the beat is licensed to an artist, they are granted 50% usually of the publishing and writers share to the song that they make. Exact numbers are different as it relies on the contract terms the producer provides.
Want more tips for buying beats online? I have even more new tips for 2021 here.
Thank you for reading my Ultimate guide to online beat licensing. Hopefully, this article has cleared your confusion about online beat licensing. At the day end, you have various options when we talk about where to get the beats. The important thing is, you take action and make progress with your music career. The way to make that progress is to take the first step. Best wishes for your endeavors.
Your favorite beat maker,
– Paul Cesar Beats