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FAQ: 5 U.S. Digital Music Use Types & the Licenses You Need

Posted by Glen Sears | June 19, 2015 11:08 am | No Comments

Digital Music License Royalties

There you are, on the cusp of planning or building your digital music service. Maybe you’re creating an online radio station. Maybe something as simple as covering a song and posting the video online. Whatever your project, if it contains copyrighted music you need a license. Probably more than one. It’s critical that everyone gets paid each time the play button is pressed.

The question is: what license(s) do you need? Mechanical? Performance? Do I have to negotiate? Is it compulsory? What about synchronization? Where do I go to obtain the licenses?

At MediaNet we spend every hour of every day ensuring digital music is properly licensed, and that all necessary royalties and fees are paid to the right parties. In this article we’ll run through 5 common ways digital music is used, and the licenses required in the United States for each. You can find more information about the different music licenses here.

Selling Permanent Digital Downloads

What Do I Need? – Sound Recording License, Mechanical License
If you’re building a digital storefront for customers to purchase and download digital music files, you’ll need to start by obtaining licenses for the sound recording from the record labels.

You’ll also need to license the right to reproduce the musical composition from the songwriter(s), known as a mechanical license. These licenses, in this case, are handled by the record label. The royalties owed are calculated per download at rates set out in U.S. copyright law (currently the greater of $0.091 or $0.0175 per minute).

How Can MediaNet Help? – In addition to hosting and delivering a 42 million track digital music catalog, MediaNet has deep relationships with record labels and rights holders, and can assist you in obtaining the proper licenses for a permanent digital downloads service. If needed, we can also submit new license requests to the music publishers on your behalf. Our system can then provide full reporting to the labels and publishers.

Read more about the Medianet Catalog here.

DMCA /Non-Interactive Streaming

What Do I Need? – Sound Recording License (via SoundExchange), Public Performance License
If you’re building an “online radio” service that delivers playlist-driven (non-interactive) content, you’ll need to start by getting licenses for the sound recordings in use. While you can license these directly from the record label, there is another option in this case.

Distributing sound recordings through DMCA/Non-Interactive Streaming is covered under the compulsory license provisions of U.S. copyright law. This allows a service to use sound recordings without a direct agreement with a record label, as long as the user abides by certain requirements. The royalties owed are then collected by SoundExchange and distributed to the appropriate rights holders. These fees are set by the United States Copyright Royalty Board and vary depending on what category your company fits into.

For DMCA Radio you will also need a license to publicly perform the musical compositions. These licenses are granted by performing rights organizations (i.e., ASCAP, BMI, SESAC), who pay the royalties to the music publishers and songwriters.

How Can MediaNet Help? – In addition to hosting and delivering a 42 million track digital music catalog, MediaNet can assist you in securing all appropriate public performance licensing for your project. MediaNet also provides play counts and relevant metadata for each stream in the SoundExchange format, so that the correct rights holders can be paid.

Read more about the MediaNet Catalog here.

On-Demand & Interactive Streaming

What Do I Need? – Sound Recording License, Mechanical License, Public Performance License
If you’re building a service that allows users to stream digital music tracks as they choose (on-demand), you’ll need to start by getting licenses for the sound recording from the record labels.

You’ll also need to license the right to reproduce the musical composition from the songwriter(s), known as a mechanical license. These rights can be obtained from the music publishers either by a direct agreements or through a compulsory license.

Once a mechanical license has been obtained, mechanical royalties will be owed to the publishers. The royalties owed are calculated based on your direct agreements with the publishing companies, or at the statutory/compulsory license rate set out in U.S. copyright law.

For online streaming you will also need a license to publicly perform the musical composition. These licenses are granted by performing rights organizations (i.e., ASCAP, BMI, SESAC), who pay the royalties to the music publishers and songwriters.

How Can MediaNet Help? – In addition to hosting and delivering a 42 million track digital music catalog, MediaNet has deep relationships with rights holders, and can assist in obtaining the proper sound recording licenses. Our system can provide full reporting and royalties to all rights holders.

We also maintain licenses to the musical compositions for many use cases. If needed, we can assist you in obtaining additional licenses from the performing rights organizations and publishers. This includes sending Notices of Intention to Obtain a Compulsory License (NOIs) for mechanical rights on your behalf. We can also administer all direct agreements and compulsory licenses you already have.

Read more about MediaNet’s Fulfillment platform here.

Music in Video Games

What Do I Need? – Sound Recording License, Synchronization License
If you’re building a video game that has copyrighted music as part of its soundtrack, you’ll need to start by getting licenses for the sound recording from the record labels.

Since music will be played in tandem with video, synchronization licenses for the musical composition in each track used must also be obtained. These are provided by the publisher, with royalties owed back directly to that publisher(s).

How Can MediaNet Help? – In addition to hosting and delivering a 42 million track digital music catalog, MediaNet has deep relationships with rights holders, and can assist in obtaining the proper sound recording licenses. Our system can provide full reporting and royalties to the record labels.

For synchronization licenses, we can help you identify the publisher(s) of any musical compositions used in your video game and assist you in obtaining and administering any licenses.

Read more about the MediaNet Catalog here.

Streaming Video With Music

What Do I Need? – Sound Recording License, Public Performance License, Sync License
If you’re building a service that uses copyrighted music in streaming videos, you’ll need to start by getting licenses for the sound recording from the record labels.

You will also need a license to publicly perform the musical composition. These licenses are granted by performing rights organizations (i.e., ASCAP, BMI, SESAC), who pay the royalties to the music publishers and songwriters.

Synchronization licenses for the musical composition in each track used must also be obtained from the appropriate music publisher(s). After a synchronization license has been obtained, royalties will be owed to the associated music publisher(s).

How Can MediaNet Help? – In addition to hosting and delivering a 42 million track digital music catalog, MediaNet has deep relationships with rights holders, and can assist in obtaining the proper sound recording licenses. Our system can provide full reporting and royalties to all rights holders.

For synchronization licenses, we can help you identify the publishers of any musical compositions used in your video and assist you in obtaining and administering any licenses.

Read more about MediaNet’s technology here.

 

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