License fee splits for film and TV
Great news, you got a track licensed for a weekly network TV show, what's called "episodic television." So now what?
The network will issue a standard license which is probably reasonably fair to you (although you should always have your legal or business advisor review it and tell you what it says). Here are a few things that it ought to say.
1. License not Ownership: First, it's a nonexclusive license, meaning that even though you license the recording (and the song, which we will come to), you are free to license the same recording to anyone else for the same kind of use (although not the same show), and you are free to continue using the recording and song however you want.
Sometimes there is a question of exclusivity, but these are limited situations and are usually for repeated uses of the song and recording (like a theme song), and are not usually part of a license. These uses are part of deals where you are commissioned to write and/or record for the show. That's beyond the scope of this post.
One thing you never do is give up copyright ownership in a nonexclusive license. There should be a line in the license somewhere that says that there is no transfer of copyright ownership.
2. Licensed Rights: The license is usually an "all-in" license for both the sound recording and the song. That means that you are licensing both the sound recording and the song because you control all the rights in each of the copyrights: the sound recording copyright and the musical composition copyright.
The most common situation where that is not true is cover recordings. If you perform a cover song, meaning someone else's song including famous songs, you cannot license the rights for that song. So if you cover a Lady Gaga song where Lady Gaga controls 100% of the publishing, every time you want to license that recording, the licensee (the network show in this case) has to go separately to Lady Gaga for the song, even though they are licensing the recording from you.
Realize what this means: If the writer of the song you covered is going to want more money than the show has in their music budget based on the past experiences of the show's music supervisor, they will probably not choose your recording of the cover song, especially if the supervisors don't have time to negotiate. These decisions are sometimes made in one day, so the answer to you on your recording of a cover is probably pass.
3. License Fees: Assuming you are not caught in the cover trap, your license fees will typically come in three flavors: master use fee for the sound recording, sync fee for your song, and performance royalties for your song.
Performance royalties are the easiest and are usually the reason why licensing is profitable for artist/songwriters. Because all television networks are licensed by ASCAP, BMI or SESAC, you will also get a performance royalty for the song every time the show is aired. (Whether this stays true in the Google or Amazon online TV environment remains to be seen.)
Master and sync fees are usually paid as a lump sum. If you are signed to a distribution or artist agreement, then your label will collect their share of that fee. The standard deal is that these fees are "net flat fee" royalties which are split 50/50 with the artist, and the artist's share is credited to the artist's account (which may have a debit balance).
There are a few issues here. First, you need to have an understanding with your label about how these fees are divided up because the label probably doesn't control your publishing (i.e., the right to license the song). The label should agree that you can be paid 50% of the license fee for the song rights. (Remember, the network ideally just wants to pay one check--maybe two, but they'd prefer one if they can.) This gets confusing because of the 50/50 split between label and artist for net flat fee.
The allocation of 50% to publishing is arbitrary, sometimes it's less, the argument being that the writers get the performance royalties and the label doesn't--so the publisher should take less on the license fee.
So, for example, on a $2,000 license fee the allocation would be like this:
$1,000 to songwriters and their publishers (50% of 100% of the fee, or the "publishers share" of the fee);
$500 to the label (50% of 50% of the fee, or the "label's share of the fee"); and
$500 to the artist (50% of 50% of the fee, or the "artist's share of the fee").
The artist's share will be credited to the artist's royalty account which may be unrecouped or have a "red balance". If unrecouped, then the unrecouped balance will be reduced by $500 and the artist will get nothing currently.
Remember--if the artist doesn't own the publishing--like on a cover song--there would need to be two different licenses because the "all in" option would not be available and the unrelated publisher would get 100% of the publisher's share (or maybe even a publisher's share that is higher than 50% depending on negotiation and how badly the show wants the song).
In the case of a cover recording by an unrecouped artist--the artist gets nothing currently for the license fee because they have already received payment for the licesne fee as an unrecouped advance but also gets nothing in the future from ASCAP/BMI/SESAC because they did not write the song.
4. Producer Royalties and License Fees: One of the most common mistakes made by artists and record companies alike is to forget to deduct the producer's share of the flat fee license. Almost every record producer gets a share of licensing revenue, computed as a percentage of the artist's royalty.
To take the easy math case, if the producer royalty is 4% and the gross artist royalty is 16%, then the producer's share of flat fee income is 25%. That amount should be deducted from the artist's share of the license fee.
Here's the little trick about this scenario: If the artist hires the producer (usually) then the artist and not the label is the one with the payment obligation to the producer. The producer is entitled to royalties after recoupment of some version of recording costs at what is called the "net artist rate". If the overall artist account is unrecouped (possibly due to a prior recording cost advance) but the producer is payable (because the album that the producer gets royalties on is recouped), then the label is entitled to credit the entire license fee to the artist's red balance and the artist has an obligation to pay the producer but no money to do it with.
5. Examples: All based on $2,000 license fee split 50/50 sound recording and song:
(a) Independent artist, no producer, no record deal no publishing deal.
Artist: $1,000
Artist/Writer: $1,000
(b) Recouped Artist/Writer signed to record deal with producer (assume 25% split)
Artist: $375 (50/50 of master fee split with label, less producer)
Producer: $125
Label: $500 (50/50 of master fee split with label)
Artist/Writer: $1,000
(c) Cover recording by recouped Artist signed to record deal with producer (assume 25% split)
Artist: $375 (50/50 of master fee split with label, less producer)
Producer: $125
Label: $500 (50/50 of master fee split with label)
Artist/Writer: $0
Outside writer: $1,000
(d) Cover recording by recouped Artist signed to record deal with producer (assume 25% split)
Artist: $0 (50/50 of master fee split with label, less producer)
Producer: -$125
Label: $500 (50/50 of master fee split with label)
Artist/Writer: $0
Outside writer: $1,000