Beatmaker Advice: Licensing, Pricing and Legal Protection

 

Got a bunch of questions from a beginner producer a while back. We'll call him Nate. Nate started out as an EDM producer, but prospective customers had him try his hand at hip-hop and he loved it. He then started to research about online beat sales and the whole business aspect of things.

When you start out, understanding the ins and outs of licensing and contracts can be a daunting task. That's where your broducer JT comes in ;)

DISCLAIMER: I'm not a lawyer. Everything I state in this article is just common sense stuff, but not legal advice per se. You should ALWAYS contact a qualified lawyer for serious questions about the business aspects of copyrights and licensing agreements.

Question 1

I sold 2 beats as exclusives. Then it dawned on me: did I get screwed? Should I have charged more?

Answer

You say they were your first hiphop beats. If that's the case, you need to prove your worth first as a producer and let the music speak for itself. With that being said, I don't know how much you charged. We can always get more money from our craft, but sometimes, it's better to prove your worth and get your foot in the door before raising prices. When you're virtually unknown, charging too much sends out the wrong message and can hurt future business.

Question 2

I then checked out beat-selling sites like Premiumbeat.com for a point of reference.

Answer

Bad idea, as these sites do not sell exclusive licenses. Always model your business after someone who has success and has the same business model.

Question 3

When you tailor a beat for an artist, how do you setup up the exclusive fee? I've seen people selling exclusives for $3000. Where we live (I'll keep that one a secret), is it a legit business approach to ask for $1000? I remember in 2008 when Cool & Dre said they sold beats for 10,000 bricks (his words).

Answer

To parallel what was said regarding question 1, you have not made a name for yourself just yet, so it's risky to charge big bucks. You might actually have to undersell yourself for a while to get your foot in the door. In any market, businesses have to "spend" money to get customers. Concerning price points you mentioned, those are established producers' fees. Again, in your hometown, you should probably start around $200 for exclusives. Then, it's your job to make yourself profitable by improving your speed of execution. Ultimately, in your local market, established producers charge anywhere between $500 and $750, so that should be your goal / focus.

Question 4

When the beat is done, is the artist obligated to give you proper credit? I don't want to become a ghost producer. How do I keep my copyrights?

Answer

To get production credits, you simply have to mention that to the artist as soon as the sale is made. With that being said, there is a world of difference between "production credits" and "copyrights". Production credits are nothing but tools to market your brand and get your name out there. Copyrights (or licensing points) are what brings in money ultimately, but you'll have to get those songs on the radio, TV or get massive streams online. So before all of that has a chance to happen, you will need to 1) become a member of a PRO and 2) make sure with the artist that the song will be registered with a PRO and that you are entitled to 50% of the publishing for the composition part (25% if there is a publisher or label).

Question 5

I asked that question to the local Authors and Composers Society and they did not have the answer I was looking for.

Answer

These organizations are not PROs. They usually help with legal and economic matters regarding TV contracts. Write to your PRO.

Question 6

I like to make rap beats for artists and I would like to generate online sales, but I'm afraid of getting sued. Is it possible to make beats, sell online AND be protected against legal issues?

Answer

Get rid of those fears. Just do not sample stuff you won't get the rights for. If you use royalty-free sample sources, I find it difficult to find reasons why you would get sued. In the legal world, law suits happen when the plaintiff has a lot of money or the law suit IS worth a lot of money to them. Unless you score a crazy worldwide hit, I have a hard time imagining such a scenario. At this point in your career, chances are slim to none. To protect yourself, create solid licensing agreements using the services of a qualified lawyer.

Question 7

Is there a way to create an LLC to protect myself and my possessions if someone was ever to sue me? Will I stay the copyrights owner or will it be the LLC ? Basically, what is the best model for a single person to put together a beat-selling business with the better legal protection?

Answer

Whether you operate your business in your own personal name or using an LLC (with only a single person behind it), if there is a lawsuit, the plaintiff will come after the single person in the end. Here's a rule of thumb: if your beat-selling business doesn't generate enough income to justify building an LLC, operate as a single person. In Canada, unless you generate more than 30K a year, you don't have to charge sales taxes and there is no real fiscal advantage to using an LLC.

Conclusion

You should never be afraid of law suits if you operate your business within the confines of the law. For small beat-selling businesses, I have never seen that happen in 20 years. Make beats, have fun and try to sell as many as possible! Fear will never bring anything good from a business perspective. But as I stated earlier, I am not a lawyer so you should always confirm with a professional for more serious licensing and copyrights matters.