Acquiring Music for a "Play with Music

A distinction must be made between obtaining the rights for a “musical play” or for a “play with music.” The “grand” performing rights ' the rights to use music for a musical play (ie, in a live production in which the music is primary) ' can be acquired from the book writer, composer and lyricist, or from the owner if someone other than the creators owns the rights. (“Small” performing rights are for additional uses that may include record sales, radio and print rights.) A play with music, on the other hand, is a straight play, a drama, a comedy or other production in which music is used as part of the play. Because the music is needed as part of a play and is not just being performed by itself on stage, radio or television, the equivalent of a grand performing right is needed in the nature of a limited non-exclusive license. The rights to use music in a play with music are obtained in almost all instances from the music-publishing company.

Acquiring the rights to use music in a play with music can best be described as a journey with Alice through Wonderland. It usually isn't an easy chore. Some of the obvious reasons for the difficulties are:

• A play producer starts with the concept that almost all publishers are going to insist on being treated equal and will want a “favored nations” clause, except that there are so many different ways of granting licenses for a play with music that treating all music publishers as a favored nation can have its problems. In fact, some publishers granting licenses are really not in touch with the vocabulary of this part of the business.
• It isn't unusual for a particular song to be controlled by several publishing companies, each having its own idea about the terms of a license. This doesn't help with “favored nations.”
• A play with music often needs the rights to more than one song, sometimes 8 or 10 or more. A song may be used in a play for 12 seconds, for 5 minutes, or for any length of time. This also doesn't help with “favored nations.”
• A particular song may be used with a piano, with singing, without singing, with an orchestra, with an existing recording and each of the other songs may be used in different ways. Another “favored nations” complication.
• Many publishers don't know the difference between a musical play and a play with music. If they knew the difference, they wouldn't ask for 3% (sometimes even 4%) of the gross weekly box-office receipts for small bits of a song or even full songs used in a play with music.
• The Dramatist Guild Inc.'s “Approved Production Contract” (APC) negotiated with the League of American Theatres and Producers usually translates into 1.5% of gross weekly box-office receipts for the music and 1.5% for the lyrics. But that is what a composer and lyricist get for all of the music in a musical play, which often is 18 or 22 or 24 completed songs with lyrics, not 12 seconds of one song and 1.5 minutes of another song and maybe as much as 3 minutes of another song. In fact, there are two separate and not equal APC's, one for a musical play and one for other than a musical play, such as a dramatic play or a comedy.

Bearing in mind as a constant reminder that a play producer must treat all publishers as favored nations, it makes good sense to try to start out with a publisher that will give the producer the most favored terms. Unless a producer deals with a number of publishers licensing de-partments on a continual basis and knows how they think, there is a great deal of luck involved in selecting which one to go to first.

How does one treat all of the interested publishers on a favored-nations basis? If it is required for the play that Song A be used for 1 minute, Song B for 3 minutes and Song C for 5 minutes, does Song B gets paid 3 times and Song C get paid 5 times what Song A gets paid? Or does it satisfy the favored-nations requirement if Songs A, B and C all get paid the same amount without consideration of how long each piece is used in the play?

Importance of Per-Performance Payments

As noted above, music publishers may want 3% or 4% of gross weekly box-office receipts for use of songs or parts of songs in a play with music. But under no circumstances should a producer give consideration to paying a percentage of the gross weekly box-office receipts. Music publishers argue that the percentage will be shared on a pro-rata basis amongst all of the publishers of songs being used. So if there are small bits of 6 songs being used, one for as little as 13 seconds and one for as much as 5 minutes, and the play will be a Broadway production in a theatre with slightly under 1000 seats, the owners of the 6 songs being used could be dividing up anywhere between $12,000 to $16,000 each week.

But if the publishers of the six songs were paid a reasonable amount for use of the songs, they would each get something like $25, $30 or $35 per performance. Thus, instead of between $12,000 and $16,000 being paid as the weekly cost for the use of parts of six songs, it would be in the neighborhood of $1,500 for the week. If the first person a producer calls insists on a percentage of the gross weekly box-office receipts of a play with music, it's best to call another publisher who better understands the economics of such a license.

By far for the producer, the easiest and most economical method of payment for the use of songs and parts of songs is to pay a fixed amount for the use of each song, without regard to whether it is sung with or without an accompaniment or how long the usage is of each number. The producer must try to convince the first two or three publishers that they are going to be favored nations by each getting the same amount for a song or part of a song used whether with or without accompaniment. After that, the play producer simply states to the rest of the publishers approached that “this is what the others are accepting.”

There is a good reason that the best and easiest way to deal with the favored-nations treatment is to pay the same amount for each song no matter the length of the use. Having eliminated a percentage of the gross weekly box-office receipts as a desirable method of paying for the use of a song, or part of a song, anticipate what can happen if the favored nations concept is applied to a payment based on the length of the use of each song.

Assume a deal is made with a publisher to pay $30 per performance for 6 minutes of a song entitled “Pretty Melody.” Next it is necessary to make a deal with the publisher of a composition entitled “Happy Song” for a 15-second use. The agreement for “Pretty Melody” provides a payment of $5 per minute, per performance. If the favored-nations treatment is applied based on the length of time the song is used, for the 15 seconds “Happy Song” is used that publisher would be offered $1.25 per performance. It wouldn't come as a surprise if the publisher turned down the offer of $1.25 per performance for the 15-second use, especially because based on an eight-performance week the publisher would receive $10 for the week or $520 for the use of the 15 seconds for 1 year. That's not exactly an offer one cannot refuse.

On the other hand, basing the payment on the same amount for each song, no matter how much of the song is used, would result in each getting $30 per performance and would be a deal all the publishers could live with.

Master-Use Licenses for Sound Recordings

Up to now, this article has assumed that the use of the music would be by the actors or the musicians performing in a play. However, the producer of the play may wish to use an existing recording of the music. The rule of thumb is that the play producer ought not to pay a record company more for a master-use license of a recorded version of a popular song than is paid the music publisher for the right to use the song. The reason is that most popular songs have been sung or played by a number of performers. If a play producer wants to use a particular performance on a recording and a record company asks an outrageous sum, the producer can find another recording of a different performer that will work.

A distinction must be made between obtaining the rights for a “musical play” or for a “play with music.” The “grand” performing rights ' the rights to use music for a musical play (ie, in a live production in which the music is primary) ' can be acquired from the book writer, composer and lyricist, or from the owner if someone other than the creators owns the rights. (“Small” performing rights are for additional uses that may include record sales, radio and print rights.) A play with music, on the other hand, is a straight play, a drama, a comedy or other production in which music is used as part of the play. Because the music is needed as part of a play and is not just being performed by itself on stage, radio or television, the equivalent of a grand performing right is needed in the nature of a limited non-exclusive license. The rights to use music in a play with music are obtained in almost all instances from the music-publishing company.

Acquiring the rights to use music in a play with music can best be described as a journey with Alice through Wonderland. It usually isn't an easy chore. Some of the obvious reasons for the difficulties are:

• A play producer starts with the concept that almost all publishers are going to insist on being treated equal and will want a “favored nations” clause, except that there are so many different ways of granting licenses for a play with music that treating all music publishers as a favored nation can have its problems. In fact, some publishers granting licenses are really not in touch with the vocabulary of this part of the business.
• It isn't unusual for a particular song to be controlled by several publishing companies, each having its own idea about the terms of a license. This doesn't help with “favored nations.”
• A play with music often needs the rights to more than one song, sometimes 8 or 10 or more. A song may be used in a play for 12 seconds, for 5 minutes, or for any length of time. This also doesn't help with “favored nations.”
• A particular song may be used with a piano, with singing, without singing, with an orchestra, with an existing recording and each of the other songs may be used in different ways. Another “favored nations” complication.
• Many publishers don't know the difference between a musical play and a play with music. If they knew the difference, they wouldn't ask for 3% (sometimes even 4%) of the gross weekly box-office receipts for small bits of a song or even full songs used in a play with music.
• The Dramatist Guild Inc.'s “Approved Production Contract” (APC) negotiated with the League of American Theatres and Producers usually translates into 1.5% of gross weekly box-office receipts for the music and 1.5% for the lyrics. But that is what a composer and lyricist get for all of the music in a musical play, which often is 18 or 22 or 24 completed songs with lyrics, not 12 seconds of one song and 1.5 minutes of another song and maybe as much as 3 minutes of another song. In fact, there are two separate and not equal APC's, one for a musical play and one for other than a musical play, such as a dramatic play or a comedy.

Bearing in mind as a constant reminder that a play producer must treat all publishers as favored nations, it makes good sense to try to start out with a publisher that will give the producer the most favored terms. Unless a producer deals with a number of publishers licensing de-partments on a continual basis and knows how they think, there is a great deal of luck involved in selecting which one to go to first.

How does one treat all of the interested publishers on a favored-nations basis? If it is required for the play that Song A be used for 1 minute, Song B for 3 minutes and Song C for 5 minutes, does Song B gets paid 3 times and Song C get paid 5 times what Song A gets paid? Or does it satisfy the favored-nations requirement if Songs A, B and C all get paid the same amount without consideration of how long each piece is used in the play?

Importance of Per-Performance Payments

As noted above, music publishers may want 3% or 4% of gross weekly box-office receipts for use of songs or parts of songs in a play with music. But under no circumstances should a producer give consideration to paying a percentage of the gross weekly box-office receipts. Music publishers argue that the percentage will be shared on a pro-rata basis amongst all of the publishers of songs being used. So if there are small bits of 6 songs being used, one for as little as 13 seconds and one for as much as 5 minutes, and the play will be a Broadway production in a theatre with slightly under 1000 seats, the owners of the 6 songs being used could be dividing up anywhere between $12,000 to $16,000 each week.

But if the publishers of the six songs were paid a reasonable amount for use of the songs, they would each get something like $25, $30 or $35 per performance. Thus, instead of between $12,000 and $16,000 being paid as the weekly cost for the use of parts of six songs, it would be in the neighborhood of $1,500 for the week. If the first person a producer calls insists on a percentage of the gross weekly box-office receipts of a play with music, it's best to call another publisher who better understands the economics of such a license.

By far for the producer, the easiest and most economical method of payment for the use of songs and parts of songs is to pay a fixed amount for the use of each song, without regard to whether it is sung with or without an accompaniment or how long the usage is of each number. The producer must try to convince the first two or three publishers that they are going to be favored nations by each getting the same amount for a song or part of a song used whether with or without accompaniment. After that, the play producer simply states to the rest of the publishers approached that “this is what the others are accepting.”

There is a good reason that the best and easiest way to deal with the favored-nations treatment is to pay the same amount for each song no matter the length of the use. Having eliminated a percentage of the gross weekly box-office receipts as a desirable method of paying for the use of a song, or part of a song, anticipate what can happen if the favored nations concept is applied to a payment based on the length of the use of each song.

Assume a deal is made with a publisher to pay $30 per performance for 6 minutes of a song entitled “Pretty Melody.” Next it is necessary to make a deal with the publisher of a composition entitled “Happy Song” for a 15-second use. The agreement for “Pretty Melody” provides a payment of $5 per minute, per performance. If the favored-nations treatment is applied based on the length of time the song is used, for the 15 seconds “Happy Song” is used that publisher would be offered $1.25 per performance. It wouldn't come as a surprise if the publisher turned down the offer of $1.25 per performance for the 15-second use, especially because based on an eight-performance week the publisher would receive $10 for the week or $520 for the use of the 15 seconds for 1 year. That's not exactly an offer one cannot refuse.

On the other hand, basing the payment on the same amount for each song, no matter how much of the song is used, would result in each getting $30 per performance and would be a deal all the publishers could live with.

Master-Use Licenses for Sound Recordings

Up to now, this article has assumed that the use of the music would be by the actors or the musicians performing in a play. However, the producer of the play may wish to use an existing recording of the music. The rule of thumb is that the play producer ought not to pay a record company more for a master-use license of a recorded version of a popular song than is paid the music publisher for the right to use the song. The reason is that most popular songs have been sung or played by a number of performers. If a play producer wants to use a particular performance on a recording and a record company asks an outrageous sum, the producer can find another recording of a different performer that will work.