What happens once a beat is sold? How can the instrumental be used? Who owns it? How do you get paid on the backend? If you’re asking yourself any of these, don’t worry; you’re not alone. A lot of this isn’t common knowledge, so I’ve written this guide to introduce you to the finer details of beat leasing.

Before we get started: this isn’t legal advice, and I’m not legally trained. This is an introduction to the technical + legal side of things, and for the best advice specific to you and your needs, you should consult a lawyer. 

As processes and laws vary around the world, the majority of this refers to processes in the USA, as this is the largest market.

Contracts

The first thing you should be aware of is the contract – contracts accompany all sales made on Airbit and ensure both parties’ rights are protected. As a producer, this means you can take legal action if the instrumental is used outside of your terms, and as an artist/customer a contract allows you to know exactly how you can use your beat. It will contain all the information regarding usage limits – including streams, sales, performances, etc. As terms are set by the producer, each contract is different, though they generally offer higher usage limits as the price increases.

 

On Airbit, all contracts can be viewed before the sale is complete, but if you’re buying a beat outside of Airbit, check with the seller that a contract will be provided, and ask to view it beforehand.

There is a lot of industry-specific wording in the contracts that you may not’ve come across in day-to-day life. Below is a brief description of some of these terms, and some of them will be covered in more detail further on.

Distribution: This refers to sales (albums, singles, etc.)

Streams: This refers to platforms like YouTube, Spotify, Soundcloud, iTunes, etc. All contracts for purchased beats should allow the customer to upload their finished song to streaming platforms.

Publishing: This is the act of earning royalties through placing the composition. This type of payment is often referred to as ‘on the backend’, as it’s received after a song’s completion as opposed to an upfront fee like the initial beat sale. This is covered in more detail below.

Royalties: Royalties are paid after the song is released and payment is based on the song’s reproduction + usage. The main types of royalty you’ll come across are mechanical, performance and synchronisation. We’ll cover this in more detail later.

Credit: This refers to the producer being credited in things like the title, description, or even as a graphic in the video itself. Some producers will include this in the contract.

Broadcasting – this refers to usage on radio, tv, etc.

Ownership and Rights

As a music producer, once you create your piece of music, you own the copyright. There’s no extra steps needed for you to own the copyright – you created it so it’s yours. However, you can still register your copyright if you choose to – this simply gives your argument more weight if it comes down to a legal battle, but is not needed for you to own your composition.

There are certain times when this can change – e.g. if you co-write/produce a track, all parties involved will own a percentage of the copyright, or if you’re signed to a label, the agreement you have with them may result in them owning the copyright. Check out this article for more information on copyright.

So how does this affect the beat-selling business? Most beats that are sold online are actually leased non-exclusively. In this case the producer retains full ownership of the instrumental, and the customer only has a (mostly) temporary license to use it, within the terms set by the producer. This temporary license generally lasts anywhere from 1 year upwards. For non-exclusive licenses this usually only changes with higher-end licenses, usually called “Unlimited”, which allow the customer to use it indefinitely, with the producer retaining full rights to the instrumental.

When exclusive rights are sold, the customer owns the full rights to that instrumental, and the producer can no longer lease/sell that beat. Anyone who has purchased a non-exclusive license to use the beat before the exclusive rights were sold can still use the beat within the terms of their contract.

What happens if the terms aren’t adhered to? As a producer you want to make sure your terms are followed by the customer – this is why you provide different license options, so customers can get extended rights if they choose. With a contract in place between the two of you, you can take legal action if the customer abuses their rights. However I recommend reaching out to them first to try and resolve this.

There are two reasons for this:

  1.  It can be costly to take legal action. And if you are doing this over a $20 lease, with a song that’s not really taking off, it may not make financial sense to take legal action.
  2. You can preserve or even create a lasting relationship. Just because a customer has used your instrumental outside of the limits set in the contract, it doesn’t mean they have done so on purpose, or are trying to take advantage. By reaching out you give them the opportunity to purchase a new lease, apologise, remove the song from circulation, etc. and they will appreciate this rather than facing legal action with no warning.

As a producer selling digital goods online, it can be hard to keep track of the usage of your beats. Especially once you start selling in high numbers. One way to do this is on YouTube is to monetise your beats through our Content ID program. With this in place, you can see exactly which videos are using your beats, how many streams it’s getting, and when it was uploaded. For other platforms like Spotify, iTunes, etc. you can use companies like Tunecore, CDBaby, etc.

As a customer I recommend always reading the contract before you complete your purchase to ensure you know exactly how you can use the instrumental. If purchasing via Airbit you can do this by clicking the ‘view license agreement’ link during checkout.

Royalties & Publishing

Royalties are usually reserved for the exclusive license only, though some producers will request this for all license types. Any royalty requests will be written into the contract, and as a customer, you must adhere to this. In order to collect royalties you will need to join a collection society (Performing Rights Organisation or PRO in the USA, Performing Rights Society or PRS in the UK). These organisations are there for the musicians/artists/creators, to help you collect your earned revenue, and without them, you cannot collect royalties.

Unlike the initial sale of a beat, royalties are earned continuously, based on the song’s reproduction & performance/usage. As a producer, this is something to consider when selling beats, as, if you sell a beat exclusively, you can no longer lease it. So if the artist does nothing with the song, you will earn no royalties from it, and you’ll miss out on your chance to earn repeat revenue – which is one of the most beneficial parts of selling beats online.

Types of royalty

In it’s most basic form, mechanical royalties are earned whenever your music is reproduced. This includes CDs/vinyls being made, streams & downloads. For physical reproduction (CD +Vinyl), you are due these royalties as soon as it’s made, whether it sells or not. As physical sales dwindle, this type of royalty does not play as big a part as it used to.

Performance royalties are earned whenever your song is played in a public place. This doesn’t necessarily refer to live performances – this can be radio play, bars, barbershops any other venues playing music. In the UK, these venues must purchase a PRS (Performing Rights Society) license in order to play music, and money from the sales of this license is used to pay the creators.

You can find more in-depth information on Performance & Mechanical royalties here.

Synchronisation royalties are earned when your song is used in TV, films & commercials/adverts. These are called placements (separate to artist placements, but the same idea), and you will most likely employ a publishing company for this, as you can give them your music and continue with your day-to-day whilst they work on getting this placed for you.

Publishing

If you’ve looked into what publishing is already, you may’ve seen the term “exploiting the musical copyright”. All this means is that the owner of the copyright is using that composition in a way that earns royalties. So, whilst publishing is a largely misunderstood topic, in it’s most basic form, it is how you earn money from royalties.

Publishing companies will distribute your song to different streaming platforms, as well actively push to get your music placed on TV, film, commercials, etc. Their job is to help you earn your royalties, and even if you’ve already joined a PRO, you will want to enlist the services of a publishing company also. PROs only collect performance royalties, so you will need a publisher to collect mechanical royalties.

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Sampling

For the purpose of this explanation, when referring to samples, I’m referring to samples of popular songs being used in beats. Many producers use samples in their beats, and most (if not all) will not have cleared these. This is common practice among producers of all levels, right up to the top. Clearing a sample is the process of getting permission to use it, which will involve payment to the owner of the sound recording. The amount will vary widely, depending on the song, artist, owner, etc. but you can expect it to be 4 or 5 figures. For a song to be released, the sample must be cleared, otherwise you face the possiblity of legal action being taken, and in this situation you will likely be up against large companies, so it’s best to avoid this by clearing the sample before the song’s release.

Producers – you should write in your contract that samples need to be cleared, so the customer is fully aware of this and can take this into account when making a buying decision. This also avoids any disputes over who’s job it is to clear the sample after the sale has been made and the song created.

Artists – if you don’t see this in the contract, or are unsure about this, always inquire with the producer before you purchase the beat. If for any reason you can’t get an answer, assume the sample has not been cleared.

You can find a more in-depth guide to clearing samples, including how to contact the owners, here.

In summary

Producers – always cover everything in the contract. This includes all terms, the duration, sample clearance, any extra requests like credit or royalties, etc. You want the customer to know exactly how they can use the instrumental just by reading the contract. This will encourage more sales as the customer can make a buying decision immediately, rather than having to request more information – in the time it takes you to respond, they may find another beat with everything laid out in the contract and you’ve just lost a sale.

Artists – always read the contract in full so you don’t inadvertently misuse the instrumental. With the nature of online sales, it is possible to take short cuts and do things ‘the wrong way’ however, it’s much better for you in the long run to do everything by the book. This means avoiding legal action, and means you can build good relationships with the people you will ultimately be relying on to provide you with beats.

Useful links

ASCAP – The American Society of Composers, Authors, and Publishers. A PRO that protects its members’ musical copyrights by monitoring public performances and ensures they are paid for this.

BMI – Broadcast Music Inc. Another PRO

YouTube Content ID – A free service allowing you to monitor and monetise your music on YouTube

CDBaby – One of the largest online distributors of independent music

Tunecore – An independent digital music distribution, publishing, and licensing service

 

Thanks for reading, let us know if you have any questions in the comments!