On the 2nd Day of Music Law...

licensing for video games.

In many respects, licensing for video games is similar to licensing for other traditional medias, such as commercials, television shows, and films. It is placement of a musical work (i.e. synchronization license) and, oftentimes, the master recording (i.e. master use license) in timed synchronization with visual images. For a discussion of the differences between Musical Works and Sound Recordings read “On the 1st Day of Music Law…“.

When a video game publisher or developer wants to include music into a game, the publisher has to obtain a license from the owner of the underlying song and the master recording. Sometimes, these parties are not the same. Nevertheless, the publisher now must work with two separate entities to acquire the rights it needs for inclusion into the game (assuming the master recording is also being used). Owning both rights significantly streamlines the process, and perhaps provides the content owner with bargaining leverage. The terms of these deals varies, though there are certain points that every agreement should include:

  1. Format: Is the license limited to a specific video game console, online platform, mobile, all formats now known or hereafter devised? While it may have once been commonplace to grant a license carved-out to one specific console or format, the current standard is a license for all formats.
  2. Type of Use: This posting is primarily focused on placement of music into video games, and not the use of music to promote those video games. It is an important distinction to understand before proceeding with negotiations.
  3. Term: At one time, the term of a music license for video games would be 5-7 years – the expected life of the game. The license would include a renewal term associated with an additional license fee. Nowadays, the more typical term is in perpetuity (i.e. forever). Video game publishers cannot take a chance that the right to use a song (perhaps integral to the game) will expire and they will be unable to reacquire the rights. If the term is in perpetuity, make sure that the license is non-exclusive (at the very least).
  4. Territory: Worldwide. If you can limit it, go for it!
  5. License Fee: The fees are across the board, from free to mid five-figures. The fee is dependent on the status of the artist, the relative interest of the video game publisher, and ultimately, the publisher’s budget for music. The agreement should specify if the license fee is associated with both the musical work and sound recording licenses, or just one. If just one, you should be able to negotiated a similar fee for the other license.

Negotiating a music-for-video-game-license (or any license, for that matter) is an art form. Sure, there are standard terms to be dealt with, but navigating those terms in relation to the fee received requires a solid understanding of the industries involved and how the current deals are shaped. It is an ever-evolving area of music licensing.

One of the biggest topics in the music for video game realm is whether (or not) a back end royalty is paid for the use of music. The game publishers have pushed back from this idea. They certainly don’t want to account additional funds for the use of music, nor do they want the added administrative burden of tracking and paying out for music royalties. And besides, for most video games, sales are because of the the games themselves and not the music… though that line of thinking doesn’t apply to music video games such as the popular Rock Band.

The Rock Band model has evolved from a game with limited music tracks, to an online network of downloadable music from which to integrate into the Rock Band game. And because music is so prominently featured in these “music-based video games”, the inclusion of a backend royalty is more likely. For songs not included into the actual software, there is the Rock Band Network that enables every music content owner to submit music to Rock Band. If accepted, video gamers can download your song direct into the game. As the content owner, you share in a percentage of the sale.

With a royalty provision, however, the license becomes a bit more complicated – determining the royalty percentage, how it is calculated, whether you have an auditing right to review those calculations, whether the license fee is a recoupable advance against royalties, etc… A back end royalty, without the contractual details, could amount to nothing more than words on a sheet of paper.

Licensing music to video games is a burgeoning area in the music industry. The mere inclusion of your music into a game provides significant promotional value to your career. So take advantage of the opportunity if it is ever offered to you. And if offered, make sure that you consider the crucial terms of the licensing deal. *Note: There are other terms that also should be considered, but are outside the scope of this posting.

Disclaimer: The materials contained in this blog posting have been prepared by Beame & Mencher LLP for informational purposes only and are not legal advice or counsel. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship. Online readers should not act upon any information in this posting without seeking professional counsel. The information contained in this posting is provided only as general information, which may or may not reflect the most current legal developments.

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