Custom Licenses

Beat Brokerz allows you to create your own custom licenses without writing legal contracts. You only need to configure the primary usage limits, and we write the legalese for each of your agreements.

If you do not set up any “custom licenses” to use for the sale of your beats, then they will automatically fall under our default “standard” license terms which are designed to be sufficient for general purposes. The point here is that you have the flexibility to sell your beats however you like.

Note: Pricing is not tied to your custom licenses. Custom licenses are merely terms that you and the buyer agree to abide. The price that the license is sold for is set individually for each beat to allow for discounting or other pricing variations per beat. The price that the customer pays and the agreement terms are together called “purchase options”.

Procedure

To create a custom license (set of terms) to use for your purchase options:

  • Hover or Click Your Username (top of page)
  • Click “Seller Center”
  • Click “Custom Licenses”
  • Click “Create Custom License”

Once you have created a custom license, you'll be able to “assign it” to purchase options when you set up each of your beats. In this way, you are able to sell your beats at any price and with any terms you feel appropriate.

Licensed Rights

There are a number of different rights assignments that can be customized for each of your licensing agreements. You'll want to understand how to use each of them and how they impact your earning potential in this music business.

Royalty Rate

One of the ways that you can customize the licensing terms for your music is by specifying a "Royalty Rate".

When selling a license through Beat Brokerz, the royalty rate can be set anywhere between 0 and 100%. As outlined in the Beat Brokerz licensing agreement, the royalty rate is the percentage of royalties you'll be entitled to collect after any "free copies" you've allowed in the license have been exhausted.

  • 100% = Pay me the maximum amount allowed by law
  • 50% = I'll settle for half of what the law allows
  • 0% = Sell as much of my music as you want, and never pay me a dime

Breakdown

When you sell a license with a Royalty Rate under 100%, that means that if the song were to generate mechanical royalties, such as if it were to be sold for more copies than your allowed "free copies", then the royalties due to you would be less than the full amount allowed by law.

So, a Royalty Rate of 50% would mean that a record company selling a ton of copies of music that uses your beat, would only have to pay you 50% of the standard royalties that would be due to you, (since the license you issued them only obligates them to pay 50% of your due royalties).

Similarly, if you issue a license with a "Royalty Rate: Free" (0%) term, that's even worse, since that means that no royalties would ever need to be paid to you for any amount of copies sold.

How To Use It

Typically, you want to leave this rate at 100% ALWAYS. You can increase the amount of "free copies" that your customer can sell to make the license more attractive, but leave your earning potential intact in case the music becomes a hit, or ends up selling a ton of copies.

If you're making a deal with a bonified record label or an established artist, sometimes, the only way to get them to include your music on an album would be to offer them a reduced royalty rate. Which is why we have the royalty rate as a negotiation point. But in that case, you know that you will be receiving a significant amount of royalties already on the backend, and who will be paying them.

Bottom line, leave your royalty rate at 100% whenever possible unless you know what you're getting yourself into.

Free Copies

The primary motivation for buyers to purchase your music is for the right to use that music to make a profit. You can offer them a certain amount of "free" copies to be sold or distributed without the requirement to pay royalties to you.

When selling a license through Beat Brokerz, the "Royalty Free Copies" amount can be set anywhere between 0 and Unlimited. As outlined in the Beat Brokerz licensing agreement, the licensee is permitted to sell or give away an amount of copies up to this limit without the obligation to pay any royalties on those copies.

Breakdown

When you sell a license with a 2,000 Royalty Free Copies limit, this means that the buyer will be able to record and distribute 2,000 copies of his music without the need to pay you any royalties. This copies limit includes all copies distributed, whether they were given away as promotion, or actually sold. So if the artist is offering the music for download on a website, whether paid or not, this limit would be exhausted after 2000 downloads.

After the royalty free copies limit has been exhausted, that does not mean that the buyer has to stop selling or distributing the music, it only means that they are legally obligated to account for and pay royalties on those distributed copies.

How To Use It

Tracking down and getting your licensees to pay royalties could prove to be a difficult task and may not even be worth it in most cases, so a healthy royalty free allowance on your license in exchange for a little more up front cash may be an acceptable compromise for you.

At the time of this writing, the statutory royalty rate for mechanical licensing is 9.1 cents per copy. If you sell a license for 5,000 royalty free copies at a price of $65.00, it's like the customer is paying you up front for the sale of those first 5000 copies at a rate of 1.3 cents per copy.

It's pretty common for a producer to settle for a reduced royalty rate on a certain amount of copies for up front cash, while still retaining earning potential if the music was ever to sell past that limit.

Free Term

Whenever you license your music with a royalty free copies allowance, there is the question of how long the licensee will have to distribute those copies. Enter the "Royalty Free Term". This license condition regulates the amount of time that the buyer has to take advantage of the royalty free benefits. Generally, you'll want to allow your licensee's at least 12 months to distribute their music for free, but allowing an even more generous "royalty free term" can provide extra value to your licenses without a significant risk to your earning potential.

Breakdown

If you've allowed 2,000 royalty free copies on your license, and a royalty free term of 12 months, this means that your licensee is liable to begin paying royalties to you either immediately after they've distributed 2000 copies, or after 12 months have elapsed, whichever comes first.

How To Use It

The royalty free term on any given license should correlate to the amount of free copies allowed. The more royalty free copies that you grant your buyer, it stands to reason that they should have more time to take advantage of that allowance. It's up to you to decide what is reasonable for each given license, but 1 million free copies allowed is not much of a benefit if you only have 1 month to distribute them.

Grace Period

Whenever you license your music with a royalty free copies allowance which is limited by a royalty free term, there is the issue of when the royalty free term begins. Technically, the royalty free term begins as soon as the license is issued, which is at the moment the artists buys the beat. This poses a problem for the artist because they still need to record the music, master the music, and release the music which takes time.

Breakdown

The grace period is a licensing option which allows the artist, well... a "grace period" to perform the previously mentioned tasks. It sets up the license so that the royalty free term doesn't begin immediately, but rather after the music is officially released, or after the grace period expires, whichever comes first. This allows the artist to take advantage of the full royalty free term that is allowed by the license.

How To Use It

If you're including royalty free copies with a royalty free term in your license, it's a good idea to allow the artist at least a few months "grace period" to release the music. Unlike the royalty free term (which should typically increase proportionately with the royalty free copies limit), the grace period is a timeframe which doesn't need to vary widely across your licensing scheme.

Tip: You don't need to get too generous with your grace period, as it's a courtesy to your buyer and asking them to release the music sooner than later is a reasonable request.

Exclusives

Exclusive licensing is a commonly misunderstood (and mishandled) arrangement for producers who are inexperienced in the music business. Some producers even have contracts with verbiage (likely that they wrote themselves) that state that they're passing all rights for the music over to the buyer, which is a re-assignment of copyright. This would be a mistake.

Breakdown

Important: Selling an exclusive, and selling your copyright are two entirely different things. If you sell your copyright, you are also selling your right to ever collect another dime on that music ever again. I doubt that's what you want to do.

Selling an exclusive (at least on Beat Brokerz) means that you are granting the licensee the right to record and release their music before you license that music out to anybody else, which means that the beat is "exclusive" to them during that period. It does not mean by any means that they become the "exclusive" owner of that music.

An exclusive license is an assurance to the buyer that nobody will release a song on that beat while they are working on releasing theirs. Therefore, an "exclusive" is a protected period of time that is promised, not an assignment of rights. And you can begin licensing the music again after the exclusive period ends, or the licensee releases their music.

How To Use It

By granting an "exclusive" license period to a buyer, you will be giving up your licensing revenue on that music for the exclusive period, or until the artist releases their music, whichever comes first. When you price your exclusive licenses, take that into consideration based on how much you would expect that beat to earn if you hadn't licensed it exclusively. But remember, it's not like you'll never be able to license that music again.

Also, if you're working out a deal with an established artist who you know will be pushing a lot of copies, you might need to use the exclusive period to close the deal while still charging a small(ish) licensing fee because you expect that there will be significant royalties generated on it over the long term.