Every once in a while I’ll offer a “peek behind the curtain” on negotiating a typical synch license for certain media to show some of the different things that must be considered when deciding whether or not to make these types of deals.
This time, I’m going to talk about licensing a song for a commercial use (since that’s still pretty much the only place to make a buck licensing these days).
First, the details (I’ll explain each further down):
Agency: Let’s say it’s one of the top agencies out there (https://adage.com/article/datacenter-agencies/ad-age-agency-report-2015-rankings-analysis/297784/)
Brand: A major, international brand
Song: A major, world famous song
Media: Basically all media
Number of Ads: Unlimited, including versions, edits, “cutdowns,” “tags,” etc.
Length(s) of Music Use: Up to a minute
Territory: US and Canada
Term: 6 months for TV, 1 year for all other media
Now, for a little background on the above:
Brand: A famous song can still be an effective tool for advertising a product, brand, etc., whether you’re a BBQ restaurant in Texas or a giant, multi-national company like Ford, Visa, Heineken, etc. Even so, all of them will pretty much tell you the same thing: the music budget is very limited, even though we want everything under the sun (and moon) rights-wise for what we’re willing to pay.
(BTW: this is universal in all synch licensing – the music budgets are always zilch, yet they always think what they’re offering is totally “fair” for the song and rights they want. It’s like me walking into a BMW dealership and saying I have $1,000 and want a 3 Series Gran Turismo. “But what do you mean it costs $35K? I only have $1,000! Tell you what, I want to be able to drive it anywhere I want, but, really, I’ll probably only drive it within 10 square miles around my home. Also, just so you know, I worked really hard to save up for this, and $1,000 is what I’m offering to every other car dealer I want to buy a car from, too. So, we good? No? You guys are some greedy bastards! No wonder nobody wants to drive your cars anymore.”)
But, I digress. Let’s just say the brand is ginormous, so they should have an equally ginormous budget for this ad, including for the music. But, I would still expect them to try and plead poverty – anything to save a buck.
Song: Everybody thinks their songs are special, but some really are – songs you know all the words to (or at least the chorus) and have heard everywhere a million times (or at least a few hundred). Those are the ones that cost the most, and are also usually the most in demand. Now, if the “creative” (i.e. the people at ad agencies who create these commercials) has absolutely fallen in love with the song (whether it’s world famous or not), the owner of the song should have some leverage. However, it’s important to remember that the agencies are often competing with other agencies for a job, or they are given a single budget from the client that will have to cover all of the costs of producing the commercial – so if you come in too high, they (or their client) will nearly always dump a “beloved” song for a cheaper one.
Media: In the old days (like, five years ago), commercials just ran in a few types of media – e.g. TV, radio and industrial (trade shows, company sales pitch materials, etc.), with internet “thrown in” on the side. Nowadays, with the music budgets dropping like flies and the global saturation of the big brands out there, most commercial requests now want all media, which can include All TV, Radio, Internet, industrial, public exhibitions (like on electronic billboards on the street and at sports stadiums), cinema (those annoying ads you now pay $20 to see before Star Wars), company PR (i.e. the client and agency being allowed to use the ad forever to promote themselves in the industry), and more. However, for an “all media” request for commercials (and anything else with a limited term), I would exclude any “permanent” home video media like DVD’s and permanent downloads, since those would, by their very nature, continue to exist beyond the period of the license and therefore allow the commercial to continue to exist beyond the license period, too.
Number of Ads: In the old days you usually had one or two commercials in a campaign, often variations of the same basic ad. But in this ADHD world we live in, an ad can become stale in just a few weeks, so if you have a longer term for your license and internet in your media, you’re gonna want to be able to use the song in multiple, unique ads. Also, that’s where things like “cutdowns” (i.e. a shorter version of the master ad that can play in a fifteen second spot on TV or on a pre-roll on a web video), “tags” (the same ad with different “tag” endings for local or regional outlets of the brand), edits and versions (pretty self-explanatory) come in.
Lengths: Ads in the US used to pretty much only be thirty seconds, but now sometimes they can be as short as five to fifteen seconds, or cover half or even all of a two-minute commercial block on TV. And on the internet – as well as in foreign countries like Japan – they can be even longer, so more often than not, agencies will ask for up to the full length of the song, with subject to those same “cutdowns,” etc.
Territory: Again, in the old days, commercials used to be aired in just one country or region. But nowadays, with the whole global marketplace thing, more and more brands are going all “James Bond villain” and demanding to put the ad out throughout the world. (Still waiting for someone to figure out how to beam an ad onto the side of the moon so I can charge for that!)
Term: Yet again, in the old days ads used to run for one year or less, and, indeed, many agencies now ask for more limited periods for TV (i.e. two to six months), and a full year for all of the other (and cheaper) media. But some, like the giant multi-nationals, will actually go for longer periods (eighteen months to two years), especially for multi-national territories. So, obviously, the longer the term (especially for certain media – see below), the more $ it should cost.
Exclusivity: Here’s where it can get a little tricky. Exclusivity means that the owner of the song agrees that they will not license that song in commercials for another brand in the same “market space” as the one it is being used in now. Example: If I agree to give the exclusive right to McDonalds to use a song in their ad for one year, TV/Radio/Internet, in the US and Canada, then I could not license that song to Burger King in the US and/or Canada during that same time period. If you do, McDonald’s could rightfully get very upset – and even litigious – so this kind of limitation needs to be taken seriously if granted. Exclusivity should also carry an additional fee (generally twenty to twenty-five percent on top of the original fee), since the song is essentially being “tied up” for that time period in that territory. However, there is an additional issue here with exclusivity and the internet, which I’ll get into below.
OK, so now that we have a little background, here’s how the negotiation would likely play out:
Looking at the request above, a couple of things would need to be addressed first –
- For me, TV is still the biggest chunk of the fee (usually fifty to seventy-five percent). So whatever numbers you are working with, start there. Radio is usually twenty-five percent of the TV fee; cinema ten percent; all other non-internet media probably fifteen to twenty percent, combined; and internet is twenty to twenty-five percent of TV, depending on the length of the license period for internet (e.g. if the license period for TV is three months and internet is a year, then you’d multiply the TV fee by twenty-five percent, then multiply that number by four).
- I would explicitly state that home video is excluded from the media. If they want to include that, it should cost more (probably an additional ten to twenty percent of the TV fee).
- If this was a World license, I would also say that no translations of the lyrics of the song could be made without permission (actually, licenses that include Canada should also say this, since they speak French in Quebec). Along the same lines, there should be no changes to the lyrics allowed (e.g. a commercial for a chain of steak houses wants to change “she’s a girl with love so sweet” to “she’s a girl who loves red meat”), without permission and an additional fee.
- I would want to see and approve of the script, storyboard or video of at least the basic ad in advance to make sure the use is not derogatory to the song or conflicts with the writer/artist’s beliefs (i.e. if the writer of the “so sweet” song is a vegan, they probably won’t want it to be used in an ad for steak houses).
- As far as exclusivity is concerned, for a license with a limited territory (i.e. US and Canada) for TV, radio, industrial, etc. but world for internet, I would make it very clear in the license that exclusivity for internet would be limited to the country/territory all of the non-internet media is limited to (US/Canada), and any ads for rival brands appearing on websites based in or serving countries outside the US would not be subject to exclusivity (e.g. if the McDonald’s commercial is airing in the US and Canada on TV, etc., but the internet territory is worldwide, and Burger King wants to use the song in a commercial in France on TV, etc. with a world territory for internet, then the Burger King ad would not violate the exclusivity for the McDonald’s ad just because people in the US/Canada can see that French Burger King ad on their computers.
So once all of these details have been hashed out, the only decision left to be made is whether or not the pittance being offered by the ad agency is enough to whore the song out for, since it’s highly likely that there are at least five other songs being considered that’ll probably take said pittance. Or, they might just go with a *gasp* music library track, or they might just hire a jingle house to record a “sound alike” track that, well, sounds like the song they wanted to license but is just different enough not to be a complete ripoff, which happens all the time, too. That’s the music biz, folks!
In the end, like with all synch licensing, the only real thing to consider is, does the use help the song more than the commercial (including monetarily), or does the use help the commercial more than the song. If it’s the first one, you can probably “afford” to be more flexible in your negotiations. If it’s the second? Screw ‘em.