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All About Library Music: Part 2

The Business
Published June 2017
By Dan Graham

We saw last month that library music can provide composers with a good income. This month, we explain how that income is generated.

Last month, we explored the benefits that can be obtained from composing library music (in a nutshell: money! artistic freedom!), and offered guidance on getting started and finding work. This month, we’ll go further into the business side of things, looking at the different types of library music publisher out there and the different types of contract that they offer.

Sony/ATV, BMG, Warner/Chappell, Universal and fast-growing newcomers ole own many subsidiary library music labels between them.Sony/ATV, BMG, Warner/Chappell, Universal and fast-growing newcomers ole own many subsidiary library music labels between them.Let’s start from the assumption that you make lots of great music and are reasonably good at selling yourself (see last month’s article for tips, but the upshot is: write a lot of short, polite but confident emails written to a name, not “hi”, containing links to 12 excellent streaming tracks). If you do have good music, then you are a talented creator making high-value goods, and you deserve a good publisher you will enjoy making music for, who will pay you well. The question, then, is not ‘Who will have me?’ but ‘Who do I want to work with?’ This menu of options will help you decide where to focus your efforts.

The Big Beasts

In terms of money and power, the library landscape is dominated by big corporate beasts with crazy ownership chains. For example, many libraries are owned by BMG, which is mainly owned by the Bertelsmann Group. The Bertelsmann group is 77.4 percent owned by the non-profit Bertelsmann Foundation, whose laudable activities include promoting European unity and transatlantic cooperation through academic research. Meanwhile, Warner Chappell is ultimately owned by an international conglomerate with interests from hotels to Russian aluminium mines.

Large library companies who are themselves subsidiaries of majors include Extreme, Cavendish, 5 Alarm, KPM, EMI, Bruton, X-Ray Dog, Altitude Music, Killer Tracks and Must Save Jane.

Thanks to gigantic, high-quality catalogues and large teams of salespeople and music supervisors, these big beasts have good relationships with large broadcasters. This can be good for their writers because of the serious broadcast royalties, and can make it harder for smaller companies to compete. On the other hand, huge catalogues can mean the extra money gets spread more thinly between more writers, potentially leaving you no better off.

The Independents

West One, De Wolfe, Position, Audio Network and Megatrax are some of the many large independent library publishers in the UK and US.West One, De Wolfe, Position, Audio Network and Megatrax are some of the many large independent library publishers in the UK and US.Large independent library publishers share the benefits of majors: they have good relationships with big-spending clients and have great sales teams. They also share some of the majors’ pitfalls, such as having larger catalogues that can mean your albums getting less attention. Compared to majors, you might find that being independent they can be more viscerally invested in their company’s success, meaning they work harder to make money for you.

There are also lots of smaller labels; if these have good quality control, good marketing and a good international agent network, the earnings per album can be as good as the best, so as ever, further research is needed to try to figure out just how good they really are.

Royalty-free Online Portals

So-called ‘royalty-free’ online portals such as Pond 5, Marmoset and Premium Beat are a  growing presence at the lower end of the library music market.So-called ‘royalty-free’ online portals such as Pond 5, Marmoset and Premium Beat are a growing presence at the lower end of the library music market.Online portals such as MusicBed, Marmoset, Pond 5, Premium Beat and Envato form a large and growing part of the landscape. They are generally known as ‘royalty-free’ libraries. Technically, this term means that once the customer has bought a licence for one track they can use it as many times as they like, but in the library world, it has come to mean a particular category of company that sells online licences to a large general market, whether these licences are technically royalty-free or not.

Historically their market has been at the lower end, targeting uses such as web sites, corporate videos, wedding and personal videos. Art Munson, who runs the popular US-based site Music Library Report, says: Smaller independents include my labels (Gothic Storm, Library Of The Human Soul, Minim and Lovely Music), Twisted Jukebox, Deep East, Focus Music and hundreds more around the world.Smaller independents include my labels (Gothic Storm, Library Of The Human Soul, Minim and Lovely Music), Twisted Jukebox, Deep East, Focus Music and hundreds more around the world.“The royalty-free sites cater to those smaller video producers that do not have a large budget to work with.” However, times are changing, and I have increasingly heard from my sub-publishers around the world (agents who sell my labels’ music in their countries) that royalty-free libraries are a rising threat to them, indicating that businesses operating on this model are making inroads into the higher end of the market. And even if the placements do end up being less glamorous than those of your trailer composer buddies, by making a large number of smaller sales, your earnings could be just as healthy. Established UK library composer Jamie Salisbury, who usually writes for majors, says: “I have a lot of old stuff on Pond 5 that does surprisingly well.”

Meanwhile UK writer Martin Gratton appreciates their more regular payments:Art MunsonArt Munson “I’ve had lots of usage on Audio Jungle (Envato). Compared to earnings with regular libraries, if you consistently submitted music there, these sites could possibly be a contender. Another plus side is the monthly payouts, compared to PRS quarterlies, leading to a more even income stream.”

Chris Haigh, a UK-based composer with many Hollywood trailers on his CV, has also seen good results:Martin GrattonMartin Gratton “I have tracks with a royalty-free company from when I started and they have always done very well for me. I don’t think there is much distinction from a top royalty-free library to a very good normal library if your deal is very similar.”

A note of caution: every royalty-free library has different deals, so check the small print. Some allow you to submit tracks non-exclusively that are also available elsewhere (sometimes in return for a lower royalty rate), some don’t, and some don’t allow you to be a member of a performing rights society. This latter clause ought to rule out any serious professionals, for whom PRS will be a lifeline and a pension.

Business Models & Deals

Size is only one way to categorise library music publishers. There is also a range of business models and deals out there. If you’ll pardon the jargon-bomb, variations include exclusive vs non-exclusive deals, reversion clauses vs in-perpetuity deals, and retitling and buyouts vs sync-splits. All of this and more will be explained below.

Exclusivity

‘Exclusive libraries’ is shorthand for ‘libraries that only do exclusive contracts’. An exclusive contract is one where the music in question goes only to one particular library, and can’t be offered elsewhere. The majority of large libraries are exclusive, from the big corporate beasts down to many online platforms and small independents.

Non-exclusive libraries, by contrast, allow the composer to retain ownership and offer the same music elsewhere. Internationally, exclusive libraries dominate, whereas the picture is more mixed in the US. Non-exclusive libraries are facing rising technical problems caused by the growth of automatic tune-recognition software which scans broadcasts and Internet videos and creates clashes between rival claims over the same music. This can make high-end clients reluctant to use non-exclusive music. As Andrew Sunnucks, founder of Audio Network, puts it:Chris HaighChris Haigh “We know from clients that non-exclusive libraries cause problems for users. Since digital technologies were developed to identify tracks, it causes confusion if a track is distributed by more than one library and appears as a conflict on various systems. As a result I know certain broadcasters have banned the use of non-exclusive libraries.”

Retitling libraries are a subgroup of non-exclusive libraries who will represent music that you have elsewhere, but only if you give your tracks new unique titles. This helps them avoid the problem of clients seeing the same tracks elsewhere. However, not only does retitling run into the same technical hurdles as all non-exclusive music, but they can actually be worse, as software detects the same music with different titles, causing conflicts and confusion for clients. According to major US trailer music writer Mark Petrie, “clients are getting wind that it’s messy legally to work with retitled music.”

Exclusive Or Not?

What’s best for composers, exclusive or non-exclusive? Art Munson of Music Library Report prefers non-exclusive libraries, saying that income can be more reliable and you retain control over your music. “Your mileage may vary, but I have worked with a few exclusive libraries and generally, for me, it’s been disappointing... I prefer to work with the non-exclusive business model to retain control on where and how my music is used.”

This can be a common sentiment in the US, but I would personally suggest that if you do your research and know that your exclusive company has excellent quality control, a good history of earnings, a healthy market and a good international distribution system, the odds are on your side. Perhaps some writers have had bad experiences, but it seems likely that others just didn’t give it enough of a chance — you have to write hundreds of tracks before the randomness settles into a predictable income.

Another consideration is that, as writer Mark Petrie suggests, non-exclusivity is becoming less of an option now.Mark PetrieMark Petrie “Non-exclusive deals had their peak a few years back. From what I’ve seen, a lot of libraries now are moving toward exclusive deals.”

Meanwhile another US writer, Kyle Kniceley, goes for the middle ground of pursuing both options:Andrew SunnucksAndrew Sunnucks “There is a section of composers and publishers that preach against non-exclusive music, and I bought into that stigma for years, ignoring that side of the business. After talking with many colleagues and friends I finally took the non-ex plunge last year and I’m now seeing the results. For me, diversity is the key. Having non-exclusive music at the ready for any given pitch is a nice advantage. Exclusive music is still the bulk of my production, though, mostly because the ceiling is much higher, monetarily speaking.”

UK writer Clive Lukover is also attracted to the greater attention that exclusive libraries pay to the music.Kyle KniceleyKyle Kniceley “I’ve always found that companies that offer exclusive agreements tend to take a more personal interest in my writing and production. This might include discussing changes to the music, instrumentation and optimising the overall sound. I never have that level of interaction with non-exclusive companies.”

Aside from the benefits of good feedback, this touches on another difference between exclusive and non-exclusive libraries: quality control. Companies taking ownership of music and building their brand on a reputation for quality will be more careful about what they put their name to than non-exclusive libraries, who are working with writers who have no commitment and might retract the music any time.

As for income differences, in my own first year as a writer I placed 50 tracks with non-exclusive labels and found the long-term income per label to be approximately a 10th of the income from large exclusive libraries. However, I never sought multiple non-exclusive libraries for the same music, as composers generally should, and therefore missed out on their full potential. Clearly, if you earned a 10th of the income per library, but from 20 companies, you’d double your winnings.

Whatever the merits, it seems that the rise of tune-recognition software and large online portals that require exclusivity are reducing the options for those who prefer the non-ex route.

How Long Must This Go On?

Another way that libraries differ is in the duration of the contracts they offer, which can range from a couple of years to (effectively) forever. Non-exclusive libraries will generally allow you to take back your music at any time, whereas large international exclusive libraries will want to keep it exclusively forever. Meanwhile, companies in between will vary. In terms of what to look for in their contracts:

  • A reversion clause is a clause in your publishing contract that returns the ownership of the copyright back to you in some event — for example, if your track hasn’t earned anything in a specified time.
  • A fixed term means that the contract ends after a pre-arranged period of time, such as three years, and would then need to be renewed. This is much more common in the US than the UK and Europe.
  • Traditional non-US library contracts are usually in perpetuity, giving the ownership of the copyright to the publisher for the ‘life of copyright’, ie. until it becomes public domain — at present, 70 years after the composer’s death.

Some people get nervous about signing away ownership of tracks forever, but that’s the way it is with most large international companies.

Publishers prefer in-perpetuity deals so that they can build up a reliable catalogue of hundreds of albums where every track will remain available whenever their clients want it, with no fear of music being used that a composer has removed from the library. As Andrew Sunnucks, founder of Audio Network, says, “Once we distribute music, our clients always expect to be able to access and license the music through us. Like any library, we have very little control of where music is used, and our historic works remain very active long after their release. For this reason, historically all the main libraries have assigned works for the life of copyright. I do believe that this comes with the responsibility for the library publisher to continue to market the entire catalogue so older works remain as active as possible.”

Art Munson of Music Library Report, however, is happier with the US norm of limited terms. “In the US it’s typical to have a three-to-five-year term. Too many composers have seen their music sit on the shelf, gathering dust, with no hope of getting that music back to try and generate income elsewhere.”

Whichever way your personal preferences lie, though, be aware that however nice it might seem to have a reversion clause or limited term, most UK labels simply won’t offer it.

Buyouts Vs Sync Splits

A key way in which exclusive libraries differ from one another is in how they divide the sync royalties with you. Sync (synchronisation) royalties are fees paid by video production companies for the right to synchronise your music to their video — not to be confused with broadcast royalties paid by broadcasters to the PRS (in the UK) when the show is aired and then by the PRS to you. Almost all companies allow you your full writer share of broadcast royalties; it is on the sync side that publishers differ.

Clive LukoverClive LukoverThe old British way was for your publisher to pay you 50 percent of sync royalties, but times are changing. Many in the UK, including my labels, stick to the old 50/50 sync-split system, but some have shifted the split as far as 75 percent in the publisher’s favour — which is fine if their broadcast income is impressive enough to make up the difference.

An alternative to sharing syncs more common in the US is a buyout fee, where you’re paid up front but then you get no share of the sync income. So what’s best, buyouts or sync-splits?

It depends on your situation. A buyout giving you no sync fees is great if they buy you out for a lot of money and you have none, and you earn great long-term broadcast royalties on top. But if you’re a few years into the game, growing fat on royalties with no expensive addictions, debts or divorces, then you don’t need the buy-out cash and sync splits might sound better. But even that isn’t necessarily cut and dried: if your buyout company is doing great in broadcast royalties by giving the music cheap to big TV shows, then sync amounts are small anyway so not important. If, on the other hand, the publisher only markets to Hollywood movie trailers where syncs are 90 percent of the income, you’re better off with a sync-split deal.

US trailer composer Mark Petrie sums it up: “Some of the big libraries in the US buy out the licensing income, paying a good upfront fee (like $1000 or more per track). That type of deal was a godsend early in my career, when I needed the cash in the short term. These days I’m more willing to take the risk and seek deals where I share the sync fees, in lieu of a significant upfront payment.”

The best deal for a writer would be a publisher that shares sync fees (perhaps more than 50 percent to you), constantly earns massive income for you in both syncs and broadcast, and also gives you a big upfront fee. If you find that publisher, let me know, and I’ll give up publishing to write for them.

Costs, Fees, Advances & Recoupment

Some libraries will pay for costs such as performers and studio time, some won’t, and some might, depending how important live instruments are for the tracks. Of those that will pay, most will expect to recoup that cost back from sync royalties, meaning you pay for it in the end. Some might even pay you a fee for your production work, a common practice 20 years ago but uncommon now (with the exception of buyout fees, described above, which mean you forfeit your share of sync income). Some will pay you advances on your future income; again, this was once common but is less so now.

Recoupment is where the library will take some money back from you before they start paying you your share of sync fees. Deals range from publishers who will add a large ‘marketing’ offset against your account in addition to other costs, to more generous deals where only advances will be recouped and no costs.

Alex BlackAlex BlackIt’s worth weighing up these figures and asking for the publisher’s position, but however bad a deal sounds, if the company is earning great royalties, try to keep that foremost in mind and follow the money, not inflexible principles that could leave you with a fantastic share of peanuts.

Who Are The Clients?

The different business models are built around the needs of different types of clients. As a general summary, online exclusive and non-exclusive platforms target individuals making videos for personal use and the lower end of the video production market: local ads, corporate videos and wedding videos. Meanwhile, traditional libraries chase a range from small independent producers up to big production companies making TV shows, TV promos and adverts. Still others target niches such as Hollywood trailers.

As the composer, it’s important that you are able to tailor your music to meet the needs of clients, but from a financial point of view, don’t worry too much about who they are. Since good money can be earned in all markets, it matters more financially that your publisher is good at earning money in the market they know best.

New Business Models

The words ‘Epidemic’, ‘Audio Network’ and ‘In-house Publishers’ can cause traditional library publishers sleepless nights. They represent the threatening rise of new business models which are eating up market share, particularly in the UK and Europe. By comparison, in the US, where there has long been a wide variety of business models, the status quo is more stable and has been fairly resistant to disruptions.

Sweden’s Epidemic Sound began in 2009 with the revolutionary idea of only taking music from composers who weren’t members of performing rights societies like PRS, and offering them a variable buyout fee. This is decided on a track-by-track basis by Epidemic, and is reportedly not a huge amount on average. This meant they could offer attractive annual blanket (subscription) deals to broadcasters where the broadcasters don’t have to pay any performance or sync royalties. That’s nice for broadcasters, but only good for writers who are short of money, write quickly or live in low-income countries.

Caspar KedrosCaspar KedrosThis model has taken over most of Swedish broadcasting and made big inroads in Europe. Epidemic are doing well and everyone else is spitting feathers. Can a low-cost model like this really take over the world and replace the established high-royalty system with one based on small one-off payments to composers? We all hope not. Everyone except Epidemic would prefer to think that well-paid composers will make better music, and that clients will pay more for that. Nevertheless, good music can be made cheaply now — and is Epidemic’s music actually bad? I’ll leave that devil’s advocacy to the devil and now perform a superstitious ritual to exorcise these thoughts from our minds. That’s better.

Another company with a newish model and some notoriety is UK’s Audio Network, which, in the early 2000s, took the bold step of starting up outside the MCPS (Mechanical Copyright Protection Society) system. See the ‘MCPS & Library Music’ box for more about the MCPS. By charging lower sync fees and taking significant market share, they have ruffled a few feathers in the UK and some other countries where they are very active, including the US. However, they have a lot of great music, are earning great royalties for their writers, and in truth, their ‘new’ business model is pretty normal for most countries. In the words of Audio Network founder Andrew Sunnucks, “I completely understand that a newcomer challenging the way libraries have always worked is unlikely to be welcomed with open arms by the establishment! It seems to me that there is general acceptance in the music industry that now we have been around for 16 years, our composers are passionately and loyally supportive of us and are earning good (and in many cases excellent) livings from their work with us, much of the criticism has died down to a very quiet murmur amongst some of the older school of my colleagues!”

A growing phenomenon around the world is for large broadcasting and production companies to create their own in-house music libraries, usually reusing music that was created for their shows. Producers working for those companies are then either encouraged or required to use this music, instead of buying other music in from conventional library labels. Signing away the rights to your music exclusively and for the life of copyright might be scary, but it might also be the best way to make money from it. Signing away the rights to your music exclusively and for the life of copyright might be scary, but it might also be the best way to make money from it.

I’ve personally heard separate stories from the UK, France, Scandinavia and Italy about the rise of this threat, driving down broadcast earnings for outside libraries. For what it’s worth though, this shift is great news for composers for old shows who find their dead music collecting new broadcast income.

How Bad Is It?

Should you be worried about these new models and the threats they pose? While it’s true that new lower-price models and in-house libraries are creating competitive pressures, there is also a tide of new content creators, and there will always be producers and editors who will push against music restrictions being foisted on them by management bean-counters. My personal interpretation is that we are experiencing more flux than decline, and that there will continue to be a good market for high-quality music. However, Global Director at EMI Production Music, Alex Black, is more cautious:Low-end use: the most important day of someone else’s life could make you a  few quid, if the wedding film-makers happen to choose your music.Low-end use: the most important day of someone else’s life could make you a few quid, if the wedding film-makers happen to choose your music. “The royalties a composer can earn for a piece of music have dropped significantly in recent years, and that is partly due to the various competing buyout business models. We believe our way through is to focus on quality of music and quality of service, so we invest in the production of our catalogues and the development of the composers we work with.”

Caspar Kedros, Director of Production at BMG Production Music, is positive about new opportunities the changing media landscape is bringing.Simon JamesSimon James “For BMG we are seeing huge growth in both the UK and USA markets... Both territories are seeing an explosion of digital and TV content being created, and one of the challenges for content creators is making sense of the licensing landscape.”

As Shakespeare probably said, there are more library music business models in heaven and earth than are dreamt of in your philosophy, and now that you’ve seen how big and varied the landscape is, you’ll realise that no single writer has a deep experience of every type of company. This can lead to wild claims on composer forums that only one way is good, and the rest of the industry is some or other kind of mug’s game or untrustworthy conspiracy.

Typical bum steers include warning you against giving away your music in perpetuity and exclusively, when this combo is actually a dominant business model that can lead to big earnings, or that certain publishers are a closed shop of insiders — just send out a thousand amazing demos and watch how those shops open for you. In truth, there is no bad business model or type of deal for writers, just lots of options. Some that are bad in the long term might be good for you just now, for example if you need instant money and are willing to forgo future royalties. Likewise, some deals that seem to have bad royalty splits can earn well if the company has a close relationship with TV shows that can earn you a ton of performance income.

So Who Should You Write For?

Composers interviewed for this article have said that all kinds of companies can earn you good money. That should reassure you that there are many different good options, and that you can safely ignore some of the more dogmatic advice you’ll receive.

Some publishers are better at their jobs than others, so it must be the case that some will do better for you than others, but no one can give you an infallible league table of angels and demons. Even if you had years of royalty statements for hundreds of writers and ran a statistical analysis, that still wouldn’t be the last word. Companies and markets are in a state of constant flux, and the past doesn’t reliably predict the future. Key staff can switch employers. Today’s hot business model could be squeezed out by competitors next year. A badly performing catalogue with good music could be bought by a visionary marketeer next month and turned into the biggest money-spinner the world has ever known.

Your best bet, then, is common sense: avoid labels with bad sleeve designs, bad web sites and bad music, work for several companies not one, think long term if you can afford to, listen to tips from writers with experience, and try to spot evidence of significant trends. And, find options that enable you to enjoy what you’re doing, lest we lose sight of the whole point of avoiding a real job.

Here’s what most library writers actually do: find a small set of companies that they enjoy working for, who look like they know what they are doing and who need and appreciate the music that they enjoy making. And, if they have some rejected tracks lying around, they offer them to large online exclusive or non-exclusive companies just because they might as well give them a chance to earn some money. Taking all my own experience and everything that’s been said here into account, that seems like a sensible plan to me.

All About Library Music: Part 1 Getting Started

All About Library Music: Part 2 The Business

All About Library Music: Part 3 The Composer

All About Library Music: Part 4 The Client

MCPS & Library Music

Library WorkThe Mechanical Copyright Protection Society in the UK is a central licensing system for all library music publisher members, which includes majors and most large publishers, using a fixed price list. This means that any video production company in the UK wanting to use any member library’s track must go to the MCPS to purchase the licence.

Benefits for MCPS publisher members (and therefore the writers for those publishers) include charging premium prices and having the BBC and other large clients on blanket deals (annual subscriptions) which make them prefer MCPS publishers. However, those high fixed rates create opportunities for non-members like Epidemic and Audio Network to offer flexible custom deals and eat up market share.

Broadcasters are major clients of library music, and some are turning this to their advantage by starting their own in-house libraries.Broadcasters are major clients of library music, and some are turning this to their advantage by starting their own in-house libraries.

A small number of other countries have similar organisations with similar tensions: JASRAC in Japan, AMCOS in Australia, BUMA STEMRA in the Netherlands and GEMA in Germany. Elsewhere, most of the world’s publishers fix their own rates and sell licences directly to clients.

Speaking up for the value of their system, MCPS Production Music Manager Simon James explains: “Our British broadcast licensees enjoy the simplicity and uniformity of our blanket licences, offering access to the most established and professional catalogues in the business. In addition to the widest choice of professionally recorded original works, there’s a reliability that all copyrights are from trusted sources, and professional media outlets value that assurance. There are plenty of alternative models emerging which challenge established practices as in most fields, but our priorities are in upholding the principles and value of copyright, both for performance and mechanical/sync, whilst maintaining high reporting standards and a consistent royalty flow through to our libraries and composers.”

Published June 2017