By Jeffrey and Todd Brabec
When a new single is released, the record company or its web licensee will many times request a promotional audio stream Internet license from the music publisher of the composition for use on the artist or record company sites. This also may apply to selected songs on the album.

Licensed Rights: The record company and its web licensee will receive the right to transmit the composition as a user selected audio stream via the Internet on certain approved sites as well as the right to digitally encode, reproduce, archive and make copies of the composition for the streaming purposes allowed under the license.

Music License Fees: The royalty which is paid to the music publisher (on behalf of itself and the songwriter) is many times a quarter of a cent ($0.0025) per stream. Royalties will usually be paid only if the stream is in excess of thirty (30) seconds in duration.

Performance Rights: Many licenses provide that the streaming can only occur if the transmission is licensed by either ASCAP, BMI or SESAC in the United States or other applicable performance right society outside the United States. This will ensure that the songwriter and music publisher will also receive performance royalties from the streaming.

Term: The term is very usually very limited in duration (e.g., ninety (90) days).

Restrictions: Many of the licenses contain the following types of limitations or restrictions:

The audio streams can only be transmitted to the users directly from or by using a link to a web page without a charge being made to the user for accessing the stream;
The license only applies to that version of the Composition on the master recording being licensed (not to any other version). For example, if a Norah Jones, Eminem or David Gray master is licensed for streaming, a cover version by another recording artist of the composition could not be streamed unless a new license was secured from the music publisher.
No downloads or electronic storage on a device or system will be available to the end user.
The end user will not be able to alter, distort, mutilate or otherwise modify the master recording or composition.
Nothing in the rights granted can be used to imply sponsorship or endorsement of the Website or web page or of any product or service contained on the site or page.

Credit: A credit line for the composition and master recording will appear on the web page or other place where users are able to select the audio streams. Credit guarantees usually provide for information on the following:

Composition Title
Recording Artist
Record Label

Server Location: There is a specific warranty as to the location of the servers (e.g., "servers are located in the United States").

Accountings: The streaming royalties are paid on a calendar year quarterly basis (i.e., ending March 31, June 30, September 30, and December 31 of each year) with payment of royalties to the music publisher made forty five (45) days later. Audit rights are available provided notice is given at least thirty (30) days prior to the audit and that an audit may occur only once for a particular statement.

Disputes: If a dispute cannot be resolved via negotiation, some agreements provide for mandatory arbitration rather than the right to litigate but this is negotiable.

© 2003 Todd Brabec, Jeff Brabec

For more information, check out the ASCAP Web site at or the book Music, Money and Success, The Insider's Guide to Making Money in the Music Industry (Music Sales). Check out also

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