I have received these very good questions from an up-and-coming producer, and I thought I would share with you the answers I gave him!
Here's his email:
Well on my way to having my own online store! Just had a few more questions:
This is really the only part I'm confused on with selling beats online. I'd really appreciate it Jean! Thanks again!
- So if I lease a beat or several, how do I keep track of songs they upload?
- So in case they sell 10,000 copies, I'm not cut out of any of my royalties?
- Or do you not worry about leasing royalties and just focus on that for exclusive rights?
- If you do keep track through BMI or ASCAP or another PRO, should you get their info first before delivering the music to them?
- Do you just put a disclaimer saying you get a certain percentage automatically?
Tips to get going with music selling and publishing
Before I answer the producer's question, let's give you a little context. You can go your whole life without knowing any of this, and still make money with a beat selling website or offline business. Problem is, you will leave a LOT of money on the table for your clients to pick up. Enters music publishing. What is music publishing you ask? It is the business of getting paid when the music is played in public: television, radio and soon, internet. That means that every time your beat plays, you are entitled to royalties ($$$). To collect this money, you need to be affiliated with a PRO (performance rights organization). It's very simple to get registered as a music composer and it's usually free of charge. The PRO usually depends on the countries you do business in or with. Let's get crackin'!
Keeping track of your works
It can be quite difficult. A lot of the beats you will sell will actually never see the light of day! Setup a 2-tier licence system to start with: exclusive licences with a PRO declaration agreement sheet and non-exclusive licenses (these usages you might never be able to track down completely, unless you develop a great business relationship with the artists and labels).
Royalties for all licenses or not
Get an agreement for your exclusive licence sales only, it's simpler that way. Focus on the upfront money on the non-exclusive licence sales, as these songs won't likely end up on the radio ;)
When to talk PRO
It's ALWAYS better to make this agreement (publishing points) before. With that being said, most of the times, the artists' label will act as a publisher, so they will register the works. You have to trust them and hope they are true to their word. That should not stop you from agreeing upfront on a point system, for example:
100% = 50% Publisher (label) + 25% Writer (artist) + 25% Composer (your cut).
To my last point, you want to make great business and don't want to attract "bad customers". Making these "5 leases for $9.99" deals will do that and can certainly hurt your business down the line (more time spent on low paying customers = less money). Your beats are of the best quality so I suggest you value them accordingly by setting up honest yet lucrative prices. Something like $29.99 for non-exclusives and $299.99 for exclusives is a good start. That way you get customers for both types of licence without looking like a cheap beat outlet or an unknown snob ;)
Disclaimers and licensing agreements
You can put one of these on the site to give the customer an idea of what usage is allowed depending on the licence type. Make this short, clear and straight to the point. Keep the real legal lingo for the actual licence agreement that comes with your sold download. You do not want to scare willing buyers that might not yet know the ins and outs of music publishing!
In conclusion, if you are serious about selling music and making maximum profit, do your homework. Read on music publishing, PROs and licence agreements. Understand these contracts as they are going to protect you and your most beloved beats down the line. Also, it is always a great business practice to TALK business before finishing a sale. That way, all expectations are levelled and bad outcomes avoided.
Special shoutout to Robert White AKA Ask About It for the questions!
Hear his work here: https://soundcloud.com/askaboutit