Subscription music licensing business models
This article explores some of the approaches music publishers and library owners can use to offer subscription “blanket” music licensing terms for the commercial use of their music catalogs.
Since this discussion involves the nature of Royalty Free music licensing practice, lets start with a summary of the main principals behind royalty free music. For complete details, please see this LicenseQuote article posted, Royalty Free Music – definition and common usage.
Summary of main principles behind royalty free music
The basic idea with Royalty Free music is that it helps buyers save money, and streamline much of the paperwork, calculation of fees, subsequent reporting and additional payments.
In terms of business structure and buyer convenience, it can be compared to Blanket Licensing, which gives music producers and buyers access to many songs (tracks/recordings) for single or multiple project uses. The difference is in the library’s license terms which may include some restrictions or limitations, but otherwise gives buyers access to one or more songs (as offered) at a flat-rate for use in one or multiple projects as needed.
So, even though Royalty Free Music is the commonly accepted term for the lifetime synchronization concept, this term is not an entirely accurate or standardized term. In the best case, its exact definition and intended usage can vary widely, but regardless there is always a fee paid (directly or indirectly) with the grant of any such music license.
Single-song licensing and beyond
When music licensing buyers only need one unique (specific) song from a publisher, the publisher will typically provide clearance and a license quote based on a standard single-song license price. This means the buyer intends to use a song (normally composition and master recording) on a one-time basis for a specific project. This suits many kinds of buyers, such as business or organization owners who only need to license music for the occasional, usually small, project.
If more (2, 3 or more) songs are needed for the same project under the same license type, the buyers can negotiate a custom multiple-song license with the publisher and usually get an attractive discount which the publisher offers based on the total number of songs involved.
On the other hand, there are licensing buyers who need access to a large variety of songs on a regular basis, such as full or part-time (professional) music supervisors, film editors, film/tv producers and various creative people working on commercial advertising and marketing projects.
Professional buyers need blanket licensing deals
These kinds of buyers are the most likely qualified to inquire about blanket licensing deals, which would give them access to any/all songs in a given publisher’s catalog. One popular approach with blanket licensing is that the licensing buyer (licensee) pays a fixed fee per term, such as 6 or 12 months, and thereby has access to use any or all songs in a publisher’s library. Usually the blanket license fee is based on the total size of the catalog, so a relatively small catalog of 500 songs would typically cost much less than a relatively larger catalog of 5,000 or 10,000 songs. But there are good and bad points (pros and cons) to offering unlimited access to a catalog based only on “x” catalog size at “y” price.
Pros – On the positive side, the licensing clients have the convenience of accessing any or all songs needed during the duration of the license term, which is typically 1 year, and can be renewed at end of each blanket license period.
Cons – On the down side, the buyers may NOT get full use of the license if the right songs are not found or used, plus the initial blanket license price may be high, especially for larger catalogs that offer many thousands of songs. If the buyer can’t find more songs/tracks that fit their project, they may be “stuck” sourcing other publishers to find those songs, which may cause them to spend beyond their yearly budget, etc.
Introducing a new subscription approach
To overcome some of these issues, there is yet another music licensing model which works similar to the current (more traditional) blanket licensing approach, while offering more flexible subscription terms and pricing. The first we’ve seen of this type is now offered by John Buckman’s new iLicenseMusic business website. The site offers high-end royalty free music licensing using a simple monthly subscription fee approach.
On the About page, you can see how the service and terms are being offered. By way of background, the catalog is owned and operated by the Magnatune, a consumer record label service, which currently has over 12,000 songs and is quickly targeting about 20,000 total tracks.
How it works
At iLicenseMusic.com, an $89 monthly fee gives commercial licensing buyers access to their entire catalog, where they can pick up to 10 (ten) songs per month to use in any way they like. The subscription is monthly and can be cancelled at any time with no continuing fees and no further commitment or other fees.
Buyers can listen and download any/all of the music online which provides buyers access to the whole run of the catalog to audition and select from.
The music used can be distributed with a client’s product and there are never any royalties to pay. This aspect implies that iLicenseMusic includes the performance fees with their license subscription terms.
The music comes directly from a selective (highly filtered) group of gigging musicians who write their own songs and get paid 50% of all iLicenseMusic licensing revenues, while getting to keep 100% of their own publishing.
The advantage of this subscription approach
What’s interesting about this subscription licensing approach is that the total size of a catalog does not directly bear on the price of the monthly subscription price. This is because the limit, in this case 10 songs per month, works regardless of the total size of the catalog. For example, it could work the same regardless if the catalog had 200, 500, 1,000 or any greater total number of songs.
In practice (which some of our own LicenseQuote publishing clients might consider), different licensing subscription plans could also be offered, based on the limit of songs used (placed into projects) instead of the total size of the catalog. For example, 5 songs/month, 10 songs/month, 15 songs/month, etc. Or it could be based on “x” songs per year at a certain price, which again, is not directly related to the total catalog size.
In my opinion, this approach makes it possible even for micro-size catalogs (with less then 200 songs/recordings) to offer a blanket subscription price based on maximum number of songs to be licensed in a give period, regardless of the catalog’s total size.
If you are a publisher using LicenseQuote
If you are a LicenseQuote publisher and would like to set up a custom Licensing Profile or License Type (in existing profile), you can do so on the Licensing Profile admin page in your account. There are help files to guide you, or you can tweak the existing Custom License type on the Pricing Matrix Edit page. You can also search our blog article with some key word like “custom license type” to read some tutorials on setting up custom license profiles, license types and related pricing matrix settings.
Optionally, you can also use the “Permit blanket download” feature on the Buyers admin page. For any Buyer listed, click the “Manage” link to open the store user dialog which lets you set permissions on a specific user (registered buyer) basis. We know that many of you are already using this option, but now you can consider a unique business approach to offering custom-tailored subscription pricing and services to any of your clients which typically need more than the basic single-song license.
If you have comments, questions of feedback, please use our LicenseQuote contact page. We look forward to hearing from you!