Negotiating Songs Created for Films

Generally, there are two ways to obtain songs for films: 1) hire a writer/recording artist to create original songs specifically for the film; or, 2) use pre-existing songs. While there are many legal points to consider, this article will be limited in scope and therefore only address some of the more basic issues associated with independent film producers using songs created specifically for film.

Many film producers would rather hire writer/artists to create songs for their films than go through the trouble of “clearing” and obtaining licenses for pre-existing songs. The producer must first determine whether the writer/artist is under contract with a record label or publisher. If so, then the producer must obtain permission to use the writer/artist’s services to avoid any potential legal problems.

In a typical publishing deal, half of the income is paid to the writer/artist (writer’s share) and the other half is paid to the publisher (publisher’s share). However, it would benefit the producer to hire the writer/artist on a “work for hire” basis. The reason for this is that when the writer/artist is employed as a “work for hire;” the producer steps into the shoes of the writer/creator and becomes the author of the work for copyright purposes. Therefore, the producer controls the publishing. For an independent producer who is involved in a low budget project, this is an extremely important bargaining chip. In order to keep upfront fees to a minimum, film producers can share their publishing income with the writer/artist as a source of payment to the writer/artist. Rather than pay the writer/artist huge fees on the front end, producers can split their publishing revenue 50/50 with the writer/artist and pay the writer/artist with back-end publishing royalties. As owners of the publishing rights, producers can negotiate with the writer/artist the following main sources of publishing income: performance royalties, record royalties (mechanicals) and synchronization income.

Compensation
Public Performance Royalties
When a song is played in a public setting (movie theaters [foreign territories], television, radio, etc.) it generates income for the song owner. Writer/artists and publishers are both represented by public performance societies (ASCAP, BMI and SESAC). These societies are responsible for licensing songs, collecting fees and paying writer/artists and publishers their public performance royalties. When negotiating the deal, producers should emphasize that this income is paid directly to the writer/artist from the public performance societies. Therefore, the writer/artist does not have to deal with the producer’s accounting practices or wait for the producer’s quarterly statements.

Movie Theatres
In the U.S., based on antitrust cases, there is no public performance income generated from movie theatres. However, in foreign territories, substantial revenue (2.5 to 5% of ticket price) can be generated from public performance in theaters. Even for a limited theatrical release, publishing income can be as high as $150,000. This income is not tied to the film’s profits, but is instead tied to the number of screenings.

Television
In the U.S. and foreign territories, public performance royalties are generated when the film plays on television (i.e. cable, pay, network and syndication). For all songs played on television, the public performance societies negotiate blanket royalties with television companies. Based on cue sheets, the television company pays royalties to the public performance societies (ASCAP, BMI or SESAC). The societies then pay the royalty directly to the writer/artist, thereby avoiding any delays caused by the film producer’s accounting practices.

Additional Compensation
Record Royalties (also known as Mechanicals)
Record royalties are generated when there are sales of a record. Overseas, record royalties are based on a percentage of the wholesale of retail price: whereas, in the U.S., the record royalties are based on a flat rate (currently 9.1 cents) per song. If the producer gives the writer/artist all of the publishing and the writer/artist has ten songs on the soundtrack album, the writer/artist can generate 91 cents per album sold (at full statutory rate). Therefore, if 100,000 albums are sold, the writer/artist can earn $91,000 from record sales alone.

Synchronization Income
Synchronization income is generated by use of the writer/artist’s songs in other motion pictures. The money is earned by way of a synchronization license (a “synch” license), which allows the entity licensing the composition from the producer to use it in another film, television program, commercial, songs video, etc. When the film producer owns the synchronization rights, the producer is entitled to all the money from this income. However, when negotiating the deal with the writer/artist, the producer can, if necessary, negotiate that the writer/artist will share this income, as well.

Other Major Contract Issues
Rights
In order to have unlimited ownership of all aspects of the songs, the film producer should seek to obtain the broadest nature of the rights from the artist/writer. If the producer hires the writer/artist as a “work for hire,” this is a given. When the film producer is the owner of the copyright, the producer is able to freely use the songs in other films. The producer can freely use the songs not only in the present film, but also in sequels, remakes, advertising, trailers, etc.

Credit
Another provision that is negotiated is the issue of credit. The most common form of credit is “Song By (Writer’s Name).” Most song credits appear buried in the film’s closing credits. However, as a bargaining tool, if the writer/artist has written most of the songs, the producer can grant the writer/artist a single-frame card credit of “Songs By” in the closing credits, separate from all of the other writer credits. Or, if necessary, the producer can give the writer/artist a spot in the film’s opening credits where the stars, producers and director are listed.

Conclusion
Frequently, by the time independent film producers reach post-production, the film budget has been exhausted. Therefore, when negotiating with writer/artist for songs in the film, producers must make the deal attractive based on back-end royalties and non-financial terms. The producer’s awareness of these potential sources of bargaining power can create the leverage to obtain the desired music for the film.