There are a number of distinct deals that go into the making of a film soundtrack and a soundtrack album. In this blog posting, I go through the steps taken by a film production company when it needs music for its movie and wants to release that music on a soundtrack album.
Required Background Knowledge
There are at least two areas of the music business you need to understand before you can understand the deals behind the making of a soundtrack and soundtrack album.
Song Versus Sound Recording. Every recorded song has two distinct copyrights - a copyright in the song and a copyright in the sound recording. The copyright in the song is generally owned by the songwriter, or her music publishing company. The copyright in the sound recording is generally owned by the record company.
Music Publishing. I'll be referring to several types of music publishing licenses. If you need to brush up in that area, take a look at the four-part blog posting on Music Publishing: How Your Songwriting Generates Income.
Now onto the example
Step One - Acquisition of Songs for Your Film
The film production company acquires songs by either commissioning songwriters to provide original music or licensing existing songs.
Commissioning Songwriters to Provide Original Music. The agreements between the songwriter and the film company often look very similar to single song agreements between songwriters and music publishing companies. The song is frequently done as a work made for hire which means that the film company will own the copyright in the song. With some negotiating power, the songwriter might retain a portion or all of the copyright in the song. The songwriter is normally compensated by receiving a fixed fee plus a negotiated publishing royalty from specified non-theatrical uses of the music. The publishing royalty split is generally 50/50 - the same as the traditional royalty split between a songwriter and music publishing company.
Licensing Existing Songs. When a film production company wants to use an existing song in its movie, it needs a synchronization license (or synch license) from the songwriter or music publisher. If the film production company plans to do a soundtrack album, it will also need a mechanical license to authorize the recording and distribution of the song on the soundtrack album.
Step Two - Acquisition of Sound Recordings
If the film production company has commissioned original music, it will need to hire performers to produce a recording. If the film company has licensed an existing song, it can either use an already existing recording of that song or record its own version of the song. If it decides to use an existing recording of the song, it must also get a master use license from the record company that released the recording.
Step Three - The Soundtrack Album Deal
If the film company decides to work with a record company to release a soundtrack album, it enters a soundtrack album deal with the record company. A soundtrack album agreement between a film company and a record label has many similarities to a recording contract between a performing artist and a record label. The film company delivers a master recording of the soundtrack music to the record label. The record company pays the film company an advance and royalties on soundtrack album sales.
Important points of negotiation for the soundtrack album deal include (i) the amount of the advance and royalties to be paid by the record company to the film company and (ii) how the release of the soundtrack album will be coordinated with the release of the film.
If the film production company commissioned original music, and thus holds the copyright to the songs on the soundtrack, it will receive music publishing income (e.g., mechanical and performance license fees) in connection with the use of the songs on the soundtrack album. Normally, the film company shares this publishing income with the writer of the original music pursuant to the film company/songwriter agreement we talked about in Step One.