The Ins and Outs of Licensing Recordings and Cover Songs on YouTube

In past articles, we’ve looked at how to take control of your creative rights online, and how to monetize your music using services like YouTube’s ContentID. But what about when it’s someone else’s rights your worried about? This week, we explore how to properly license recordings and cover songs for streaming video services, so that you can make some money off your videos and performances legally, ethically, and without getting the pants sued off of you.

Online Media, Growing More Profitable, and More Controlled

Over almost a decade in existence, the amount of revenue that YouTube earns and pays out to rightsholders has grown at an exponential rate. Although Google does not release specific revenue figures for the YouTube service, estimates are that it generated anywhere from $3.5 billion to $5.6 billion in advertising dollars last year, more than half of which is paid out to content creators. This year, their market in video ads is projected to grow another 40%, and in 2015, estimates are that YouTube will account for almost 20% of the US digital advertising market on its own.

Along with that flow of money naturally, comes the flow lawyers and publishers, all looking to do well by for themselves and their clients. In recent years, this has helped make the conversation regarding YouTube payouts go from “how will they ever monetize that?” to “how much can I get?”. A growing chunk of this new revenue is going to musicians, and as the stakes grow higher and the number of legal claims increases, what was once the Wild West of the Web is starting to look about as wild as Salt Lake City, Utah.

This means that if you’re looking for YouTube and services like it to play a real role in your career, you’d be wise to do it right, by reducing or eliminating the risk of finding yourself on the wrong end of a legal claim.

Licensing Music Clips

If you’re a casual user who wants to use someone else’s original recording on your YouTube video, the process can be pretty straightforward: You can simply upload the video, and if the song comes up as a match in ContentID, the original rightsholder will automatically be notified, and given the opportunity to block, track, or monetize your video

More traditional or professional video creators however, will tend to work out these deals in advance, and for two reasons: 1) They may be able to negotiate better deals than what can be had through YouTube’s automated system, and 2) If they use a song in a video without getting permission first, they’re much more likely to face a direct legal claim for any time that the unauthorized video was up.

This kind of usage, where an original music recording is set to video, is called “synchronization.” There are no laws or statutes dictating what’s a fair price for one of these “sync licenses”. Instead, it is at the sole discretion of whoever holds the rights to the song itself, and the specific recording of the song being used. (Note that this is not always the same person or company!) And these rightsholders always have  the right of refusal.

Although you may be able to get away with placing a song in a casual “user generated” YouTube video without any major repercussions beyond a takedown notice or having to host a third party ad, if your video project is more a professional one, you’d be well-advised to secure your license in advance. At best, an unhappy rightsholder could have your video taken down, or could commandeer a serious chunk of the ad revenue you might have be hoping for in order to make your project sustainable. But at worst, they can go a lot further than that.

On any serious video project, these music synchronization licenses can and should be negotiated directly with the publisher. To find out who is the publisher of a particular song, you can search one of the major performing rights organizations like BMI, ASCAP or SEASAC.

Licensing Cover Songs

Things are only a little bit more complicated for cover songs.

If you were just releasing a cover song on CD, MP3 or on an audio-only streaming site, all you would need is a “mechanical license.” These are pretty inexpensive and easy to obtain, and are generally purchased through the Harry Fox Agency, or sometimes, CDBaby’s Limelight service.

Unlike synchronization rights, mechanical licenses are “compulsory.” This means that person or company that own the right to the original song and recording can not refuse your right to make a cover song. They can’t set the price either: It is “statutory”, and for CDs and downloads, that mandatory rate is currently about $0.091 per copy, unless the rightsholder feels kind enough to waive it for you.  (There is also some ability to wrangle out of paying mechanicals on promotional copies of CDs, but that’s beyond the scope of this article.)

Things change slightly once you start thinking about putting your cover song on a service like YouTube. At this point, you need to think about getting a mechanical license for any audio-only distribution and a sync license if you’re going to use the cover recording in a video.

Just like with normal sync licenses, the original songwriter technically has the right of refusal for sync licenses on cover songs. This prevents say, Pringles Potato Chips or Mountain Dew from hiring their own in-house performers to “cover” your song once you’ve refused to let them use it in their commercial. (The only exception to this right of refusal is for cases of criticism, commentary, parody, news reporting or other instances covered by “fair use“.)

In practice it is very unlikely (although possible) that an original rightsholder would send a takedown notice for a cover song that was merely posted on YouTube against a still backdrop. Likewise, most rightsholders don’t seem to be interested in refusing sync licenses for live performances of a cover song. So, unless you are trying to put your cover song into a film or commercial, or think you can negotiate a better deal directly with the rightsholder, this is one area where it is probably okay to simply rely on YouTube’s built in revenue sharing tools to obtain and pay for a sync license.

Of course, this is also the part of the article where I remind you that this is not legal advice, that I am not a lawyer, and that if you’re serious about your project and interested enough to read this far, you should probably go talk to one.

(In editing this story, I asked a few key questions of the very helpful Jeffrey Jacobson, music and entertainment attorney with The Jacobson Firm. A representative of the Harry Fox Agency also weighed in to clarify that a mechanical license is only necessary for pure audio distribution, and is not needed when a cover song is intended for synchronization only. If any errors remain, I assure you they are my own.)

Justin Colletti is a producer, educator and writer who lives in New York.

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