Understanding Beat Licenses & Agreements
The licenses and agreements that accompany beats can be both intimidating and confusing to up-and-coming music artists. This guide should hopefully clear up any confusion you may have about it.
An artist who wants to buy a beat is known as the "licensee", or sometimes simply the "buyer". The person selling the beat is called the "licensor" or the "producer".
There are two types of licenses typically offered. The first (and most popular) is Non-Exclusive, sometimes known as "leasing". Some producers offer 'sub-licenses' within non-exclusive, which often have different contract provisions and files included. (ie. Standard, Premium) The second type of license is Exclusive, which also has varying provisions from producer to producer.
A Non-Exclusive licenses give you rights to use the master recording beat (say in .wav or .mp3 format) to create a song with your lyrics, raps, hooks, etc. The producer (or whoever wrote the song) still retains copyright ownership of the beat. The producer has the right to license the beat to whomever he wants to until the beat is purchased exclusively.
Non-Exclusive licenses usually have limits on how many units you can sell. If you think your song is going to be a hit record and make a lot of money, you will want to opt for the Exclusive License.
If you are serious about your music, a certain beat catches your ear and you want to retain ownership of the sound recording, then you want an Exclusive License. This gives you complete control over what you do with the master recording. You also usually get unlimited rights to sell as many copies as you wish.
Producers often differ on how they define their exclusive licenses, so it's VERY important to read and understand them before signing. Sometimes a producer will not let you re-sell or license the master to another entity, such as a record company or another or artist. Producers will always state that they need to be credited for their work in writing wherever possible. (ie. Produced by BeatMaker)
It is definitely possible to customize agreements - everything is negotiable. You should have a full understanding of what you are signing, so if you don't understand, you may want to consult with a lawyer.
Producers often want payment before they will send you an agreement. This can be an uneasy feeling if this is your first time dealing with a producer and/or it is a considerable amount of money. You have the right to ask to see the agreement before you send the payment. Most producers are fine with this and will send it to you no-questions-asked. Many producers have stopped using paper contracts and have moved to "contract services", such as Adobe's EchoSign - these are perfectly acceptable.
Work For Hire Agreement
These agreements are less typical because they are not often in a producers best interest. A "work made for hire" is a work created by an employee as part of his or her job, or a work created on behalf of a client. It is an exception to the general rule that the person who actually creates a work is the legally recognized author of that work. According to copyright law in the United States and certain other copyright jurisdictions, if a work is "made for hire", the employer - not the employee - is considered the legal author. (source: Wikipedia)
In other words, if you and a producer sign a Work For Hire agreement, you are the legal owner and author of that beat. Many producers will not sign this type of agreement.
Choosing which license to buy depends on what you are trying to achieve. If you have a constrained budget, then go with a non-exclusive license to start. If you use the beat and think the song could make a lot of money, then come back and buy the exclusive license. Just know that the producer could potentially sell the exclusive license to another person after you've purchased a non-exclusive license. (if this is the case, your license is only valid as long as you don't exceed the distribution limits) If you think you're sitting on a hit record, buy the exclusive license at your earliest convenience.