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How Does Music Licensing Work?

how does the music industry work

One of the biggest revenue streams for artists is licensing music. Music licensing can be a confusing, intimidating journey, and most artists don't find success in this area of the music industry without a little guidance. But we’re here to clarify any questions and misconceptions you might have about the whole process. Let’s get started!

What is a Music License?

A music license is when a copyright holder (you the artist) grants the right to use his or her work publicly, and in return receives payment via a flat fee and/or royalties based on an agreed contract. Sometimes these licenses have a time limit, say for a few months during the holidays, while other licenses can be granted indefinitely or bought outright from the copyright owner.

Types of Music Licenses

  • Synchronization License (or Sync License)

    Frequently called a sync license, this is specialized for use with visual media, such as TV shows, film, commercials, news segments, video games and more. A license fee can be determined by how the song will be used, where it will be played, anticipated exposure, experience, and any other royalty rate. This license is also common with artists who want to make a music video for cover songs of other artists’ work.

  • Mechanical License

    Used for the reproduction of the song in physical form, most often CD’s or soundtracks. Typically only relevant to the song itself, and not any videos associated with it. Extremely common if you release covers of songs that aren't in public domain.

  • Public Performance License

    This type of license is very broad and encompasses radio, websites, stores, restaurants, music venues, nightclubs, and other public spaces. You usually don't need to worry about acquiring this license unless you are using a song for business purposes.

  • Master Recording License

    If you’ve ever asked yourself, what is a master recording license and why is someone asking for it, don’t panic! A master recording license, also called a master use license or master license, grants the recipient the right to use the entirety or any parts of the original sound recording for their means. This is common with compilation albums like "Top 20s".

  • Print License

    Primarily used to reproduce sheet music or lyrics, whether for karaoke, merchandise, marketing materials, and more.

  • Blanket License

    This license allows users to have access to a portion or complete collection of songs for a flat annual fee, which can be convenient for places that just want background music like a shopping center or a cafe. It’s less time-consuming to compile all the songs requested, instead of creating a license for each and every track.

Music License vs Copyright: What’s the Difference?

A music license is a “lending license” for others to use your song for a set time period for a fee. On the other hand, copyrights are for the recording and lyrics themselves. So, you can use licensing to “lend” the song, but the intellectual property of the song itself stays with the copyright owner - that is, you (or your label, depending on your contract).

How Do You Know If You’re the Rights Holder?

If a record label paid for the recording and publishing of the song, they can OWN the rights to the song in its entirety for the duration of your contract with them. So, if you’re signing on with a record company for the first time, make sure to read that contract thoroughly to determine how much sway you have over the rights to your songs. Otherwise, if you created everything out of your own pocket, then the rights belong to you! Which means you get more change when it comes to royalty earnings.

Why is Stock Music Different?

You’ve seen stock photos, right? They’re those cheesy pictures that can be downloaded by multiple people, turned into memes, and splashed across your advertisements. These images can be purchased for a very low amount (or sometimes are free!), and used however they wish. Stock music is much the same way: while playing songs on the radio or in a cafe requires special permission and pays out royalties per usage, stock music is sold for a one-time flat licensing fee which is split between the stock music service and the rights holder of the song—with no additional royalties on the back-end.


IconQuick Tip:
If you have empty audio tracks sitting on your computer and don’t know what to do with them, we recommend you look into selling it through stock music sources! These are music libraries like Music Vine, MusicBed, and Marmoset. You get a cut every time your music is paid for and downloaded, which makes for some great passive income. You’ll notice that stock music from an audio library can be very popular with videographers and YouTubers.

Do You “Lose” the Rights to Your Music After It’s Licensed?

NO! If you’re an independent artist, you keep the intellectual property of your original music. As we said before, think of licensed music as “lending” your original song for public purposes, with a time limit or specific media use (or in the case of exclusive rights, they are the only ones that can use the song indefinitely and essentially control it), but you never actually sign over your songwriting credit. That’s something to be discussed in contracts with labels, which is a whole other blog post down the road.

Watch this video for more tips on protecting your music from having the rights stolen!

Music Licensing Fees

Your music doesn’t have to just passively be available to stream. Next time you pull up a vlogger’s new video, or watch the newest episode of that reality TV show, sit back and really listen to what’s going on in the background. Do you hear those instrumentals? Odds are, that piece of music has been sold using licensing! It’s not a crazy money-making scheme for everyone, but the more content you have, the more you can earn royalty payments as a side hustle with sync opportunities.

Okay, let’s talk about money! How much should be charged for a music license?

The beauty of the world of music licensing is that you can find or create music licensing agreements for almost any scenario. For example, MusicBed wrote a post about the common types of licenses they offer to customers looking for music, and had prices like this:

  • “Wedding License - $49”
  • “Business License (0-10 Employees, Web/Streaming, No Paid Advertising) - $199”
  • “Non-Profit, 501(c)3 License (51-100 Employees, External, 501(c)3, No Paid Advertising) - $199.50”
  • “Film License ($250-$500k Budget, Feature Film, Web/Streaming) - $499”

For more from MusicBed, check out their post here!

As you can see, you can calculate payments based on expectations of exposure, what the project budget is, or as a flat fee.

“What Music Can I Play Without a License?”

Let’s say you’re a store owner, a bar, or the little cafe on the corner. For public spaces like this, the answer to this question is...none! Listen, you wouldn’t steal a piece of art and put it on your own advertisements, right? The same goes for the music you play in your establishment. Even royalty-free stock music comes with a price, and most of the time it’s as low as $1. It’s only fair to pay artists their due, in exchange for the work you love.

And if you’re an artist and someone is asking to use your music for free of charge, don’t do it! Get a deal in the works with a music license appropriate for the venue and their needs—and make yourself a few dollars.

The Role of PROs and Music Rights Organizations

You’ve probably heard the question, what’s SoundExchange? Who’s BMI? Do I need to know what a Performing Rights Organization is?



Calm yourself, padawan.

This can all seem overwhelming and confusing, and that’s where music rights organizations come into play as your knight in shining armor. You register your songs with them, and they handle licensing and collect fees and royalties on your behalf when it comes to streaming or public performances of your work.

Take a look at these well-known organizations who’ll join you in your corner (or if you're a business, they can help you with acquiring the licenses!):

Some organizations are US-based, while others can address your global music rights. All you’d have to worry about is creating more content and connecting with your fanbase. In addition, these aren’t specialized agencies you apply for and cross your fingers; they take any artist looking to monetize or copyright their work.

Want to learn more about how to open doors for sync opportunities? 

Refine your artistic skills and master the art of composing songs that not only captivate new fans but also align seamlessly with industry opportunities like Sync Licensing with The Artist's Guide to Music Licensing at the link below:

The Artist's Guide to Music Licensing™

The Artist's Guide to Music Licensing is your gateway to breaking the exhausting cycle of creating and promoting music with scant returns. It provides a clear, artist-centric framework for crafting sync-friendly music, along with a guided pathway to reach the right audience. With an unprecedented demand for original music in film, TV, and commercials, seize the opportunity to write and produce music for these lucrative markets.

Get Details and Join