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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.
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.
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.
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.
The term is very usually very limited in duration (e.g., ninety (90) days).
Many of the licenses contain the following types of limitations or restrictions:
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:
There is a specific warranty as to the location of the servers (e.g., "servers are located in the United States").
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.
If a dispute cannot be resolved via negotiation, some agreements provide for mandatory arbitration rather than the right to litigate but this is negotiable.
© 2002 Jeff Brabec, Todd Brabec
For more information, check out the ASCAP Web site at www.ascap.com or the book Music, Money and Success, The Insider's Guide to Making Money in the Music Industry (Music Sales). Check out also www.musicandmoney.com