Music License Agreement: Definition & Sample

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What is a Music License Agreement?

A music license agreement is a legal contract between a copyright holder (musician) and another party to allow them to use their copyrighted material (music). If you're using someone else's creative work for commercial purposes, then it falls under public performance rights which can be granted by paying royalties or through a license that allows the individual to perform the song in exchange for an upfront fee.

A music license agreement specifies the rights that will be granted: how many copies of the work can be reproduced, what territory or countries it applies in, whether it's exclusive or non-exclusive, and if there are any limitations on how much money has to change hands before royalties need to be paid out. It may also specify things like when ownership reverts back to the copyright holder (in case of termination), who owns derivative works created under this agreement, and where all parties agree on jurisdiction should any disputes arise.

Music License Agreement Sample

This Digital Music and Video License Agreement (the "Agreement"), together with the Standard Terms and Conditions attached hereto and incorporated by reference, is entered into as of the date of signature of this Agreement (the "Effective Date") by and between Mohen, Inc. d/b/a SpiralFrog, a Delaware corporation with its principal place of business at 95 Morton Street, New York, New York 10014, (referred to in this Agreement as "Licensee") and the licensing party listed on the attached signature page, including, but not limited to, such licensing party's Affiliates, as defined herein (collectively referred to in this Agreement as either "Licensor" or "you"). Unless otherwise indicated, all capitalized terms used in this Agreement have the meaning set forth in the Standard Terms and Conditions.

WHEREAS, Licensee desires to offer to Users (as defined below), solely via its digital music service (the "Service", defined and described more fully below and in the annexed Exhibit A), Limited Music Downloads and Music Streams (as such terms are defined below) embodying Master Recordings (as defined below), including Relevant Compositions (as defined below); and

WHEREAS, Licensee desires to offer to Users, solely via the Service, Limited Video Downloads and Video Streams (as such terms are defined below) embodying A/V Master Recordings (as defined below), including Underlying Compositions (as defined below); and

WHEREAS, in connection with the operation of the Service, Licensee seeks licenses to reproduce and distribute the Licensor Compositions as embodied in Limited Music Downloads, Music Streams, Limited Video Downloads, and Video Streams, and Licensor is prepared to issue such licenses to Licensee in connection with the Service;

NOW, THEREFORE, in consideration of the promises contained in this Agreement and for other good and valuable consideration, the adequacy and sufficiency of which each party hereby acknowledges the parties agree as follows:

the Licensed Content (listed in Exhibit B, as amended from time to time, and incorporated by reference) to Licensee, during the Term and within the Territory:

(a) to reproduce Relevant Compositions and Underlying Compositions as Digital Files on Secured Servers;

(b) to reproduce and distribute Relevant Compositions and Underlying Compositions embodied in Digital Files as Limited Music Downloads, Music Streams, Limited Video Downloads, and Video Streams;

(c) the right to use reputable third-party meta-data (i.e., data from All-Music Guide, Gracenote, Muze and Pollstar) in conjunction with the Licensed Content; and,

(d) those rights that may not be expressly granted hereunder that permit Licensee to carry on its business and operate the Service as intended by the parties under this Agreement.

within thirty (30) days of execution of this Agreement, and, as new Licensed content becomes available, Licensor will provide the respective Licensed Content within thirty (30) business days of Licensor's receiving notice from Licensee requesting such Licensed Content.

Licensee shall obtain licenses to publicly perform Licensor Compositions in connection with the Service from the applicable performing rights societies);

(iv) rights to use, exploit, or permit the use or exploitation of any Licensor Composition or the Lyrics of any Licensor Composition in a video game;

(v) rights to use, exploit, or permit the use of exploitation of any Licensor Composition of any Licensor Composition as a ringtone, ringback tone, or other so-called "telecommunication personalization product";

(vi) adaptation (derivative work) rights or right to alter the fundamental character of an Licensor Composition or the Lyrics of an Licensor Composition, or to create any derivative work based in whole or in part on an Licensor Composition or the Lyrics of an Licensor Composition;

(viii) use of a Licensor Composition for a marketing campaign, product tie-in, game or contest, or otherwise to directly advertise, promote or cross-promote any product or service; and,

Provided however, nothing shall prevent Licensor and Licensee from entering into a separate written agreement according to the terms of Section 15 of the Standard Terms and Conditions, by which Licensor grants Licensee any such rights according to the terms of that separate agreement.

Composition occurs in connection with third-party advertising; however, Licensee shall not: ( I )without Licensor's prior, written consent create a direct association

between any specific Licensor Composition and any third-party advertising in a manner that suggests Licensor or artists featured in any specific Licensor Composition is associated with or endorses any advertiser, product or service; or,

(ii) knowingly display advertisements from any entity whose primary business relates to the unauthorized distribution of copyrighted material, illegal drugs or pornographically obscene.

(d) For the avoidance of doubt, ownership and control of any copyrights and/or trademarks in any Licensed Content is retained solely by Licensor, and neither Licensee nor any User or other third party shall obtain any ownership rights in any work derived from or that makes use of any Licensed Content.

Downloads and Music Streams, Licensee shall pay to Licensor a royalty equal to the greater of (i) ten percent (10%) of Gross Music Revenue or twenty percent (20%) of Master Revenue, multiplied by Licensor's Music Royalty Share.

(A) The "Music Royalty Share" shall equal a fraction, the numerator of which shall be the sum of the number of Music Plays and Music Streams, and the denominator of which shall be the sum of the number of Music Plays, Music Streams, Service-wide Music Plays and Service-wide Music Streams.

(B) The "Music Master Revenue" shall equal the amount the owner of the Master Recording embodying the Licensor Composition receives (or is credited) for the exploitation of Limited Music Downloads and Music Streams.

(C) Notwithstanding the foregoing, solely with respect to the Non-CMRRA Compositions exploited in Limited Music Downloads and Music Streams in Canada, Licensee shall pay to Licensor a royalty equal to the royalty payable for the comparable Limited Music Downloads and Music Streams under the terms of the CMRRA Agreement.

Downloads and Video Streams, Licensee shall pay to Licensor a royalty equal to the greater of (i) ten percent (10%) of Gross Video Revenue or (ii) twenty percent (20%) of Video Revenue, multiplied by Licensor's Video Royalty Share, which will be calculated on a quarterly basis:

(A) The "Video Royalty Share" shall equal a fraction, the numerator of which shall be the sum of the number of Video Plays and Video Streams, and the denominator of which shall be the sum of the number of Video Plays, Video Streams, Service-wide Video Plays, and Service-wide Video Streams.

(B) The "Video Master Revenue" shall equal the amount the owner of the Master Recording embodying the Licensor Composition receives (or is credited) for the exploitation of Limited Video Downloads and Video Streams.

(d) Unsold Advertising Inventory. Licensee shall provide to Licensor, and Licensor shall be entitled to use, a pro-rata share of six percent (6%) of Licensee's unsold advertising inventory, which Licensor may use to promote Licensed Content owned and/or controlled by Licensor. Licensor's pro-rata share of unsold advertising inventory shall be determined by using the fraction used in calculating Licensor's Music Royalty Share multiplied by six percent (6%) of the unsold advertising inventory available based upon the previous quarter's royalty calculation (or in the case of the Service's first quarter after launch, a commercially reasonable estimate of the same).

(e) Licensee will use its best efforts to track Music Plays, Service-wide Music Plays, Video Streams and Service-wide Video Streams using the system of each Covered Device, which systems are subject to interruptions and other interference not within Licensee's control, and that such interruptions and other interference will affect the royalty calculations set forth above.

( f ) If, during the Term of this Agreement, we have an agreement with any third party publisher ("Other Agreement") granting us the same distribution and reproduction rights granted hereunder in third-party-owned musical compositions or shares of musical compositions, yet prescribing a royalty computation method ("Other Method") which, if used under this Agreement, would result in royalty computations more favorable to you than that

prescribed in this Section 3, we will so advise you and will pay you royalties based on the Other Method instead, for the portion of the Term of this Agreement during which the Other Agreement is effective.

4. Advance. Licensee shall pay to Licensor the sum of Three Hundred Thousand United States Dollars (US$300,000.00) as an advance against the amounts otherwise payable to Licensor under paragraph 3 above, payable promptly after the full execution of this Agreement.

5. Term. The term of this Agreement shall commence as of the Effective Date, and unless earlier terminated in accordance with the Terms and Conditions, shall continue until December 31, 2008.

prescribed in this Section 3, we will so advise you and will pay you royalties based on the Other Method instead, for the portion of the Term of this Agreement during which the Other Agreement is effective.

4. A dvance. Licensee shall pay to Licensor the sum of Three Hundred Thousand United States Dollars (US$300,000.00) as an advance against the amounts otherwise payable to Licensor under paragraph 3 above, payable promptly after the full execution of this Agreement.

5. Term. The term of this Agreement shall commence as of the Effective Date, and unless earlier terminated in accordance with the Terms and Conditions, shall continue until December 31, 2008.

"eCommerce Revenue" shall mean all amounts or other considerations received by Licensee during the Term, from (i) Users, and (ii) from any other entity (including, without limitation, advertisers), who sells goods or services on the Service or via a separate website that is accessed via a direct link or advertisement on the Service and for which sales Licensee receives consideration, including, but not limited to, Referral Fees.

"Gross Music Revenue" shall mean Advertising Revenue which is directly attributable to Limited Music Downloads and Music Streams.

"Gross Video Revenue" shall mean Advertising Revenue which is directly attributable to Limited Video Downloads and Video Streams (other than Limited Video Downloads or Video Streams of a prelicensed video product, such as television programs, motion pictures or video games).

"Licensee" shall mean, individually and collectively, Mohen, Inc. d/b/a SpiralFrog and each of its Affiliates.

"Licensor Composition" shall mean only that portion of the ownership, interest and rights in a Composition that is owned, controlled by or licensed to Licensor in the Territory, which are listed in Exhibit B and which are available for the purposes described in this Agreement.

"Limited Download" shall mean an encrypted digital transmission of a time-limited or other use-limited download of a Digital File embodying a Master Recording, which is delivered via the Service from a Secured Server(s) to the Covered Device of a User in accordance with the terms and conditions of such User's agreement with Licensee and is only available to such User through such Covered Device for a limited period of time in accordance with the terms of this Agreement.

"Limited Music Download" shall mean a digital transmission of a time-limited or other use-limited download of a Licensor Composition embodied in a Master Recording, which is delivered via the Service from a Secured Server(s) to the Covered Device of a User in accordance with the terms and conditions of such User's agreement with Licensee and is only available to such User through such Covered Device for a limited period of time. Each Limited Music Download times out within two months from the date on which the User first downloaded the Master Recording, or from the date on which the User last reconnected his/her Covered Device so that the service can renew the license and collect play-count information or from the end of the term.

"Limited Video Download" shall mean an encrypted digital transmission of a time-limited or other use-limited download of a Licensor Composition embodied in an A/V Master Recording, which is delivered via the Service from a Secured Server(s) to the Covered Device of a User in accordance with the terms and conditions of such User's agreement with Licensee and is only available to such User through such Covered Device for a limited period of time. Each Limited Video Download times out within two months from the date on which the User first downloaded the Master Recording, or from the date on which the User last reconnected his/her Covered Device so that the service can renew the license and collect play-count information or from the end of the term.

"Music Play" shall mean each instance whereby a User causes a Licensor Composition to be heard in its entirety (as embodied on a Master Recording) on a Covered Device, when such content was originally delivered to the Covered Device as a Limited Music Download.

"Music Stream" shall mean an encrypted digital transmission of the Licensor Composition embodied in a Master Recording from Secured Servers via the Service that allows a User to receive and listen to a particular Master Recording upon request at a time chosen by the User using streaming technology (including, without limitation, via Real Networks' RealAudio or Microsoft's Windows Media Audio formats) through the User's Covered Device, which transmission will (a) not result in a substantially complete portable reproduction of such Master Recording (other than a temporary copy such as those used solely for caching or buffering) and (b) occur substantially contemporaneously with the play of the given Master Recording.

"Person" means a natural person, a corporation, a limited liability company, a partnership, a trust, a joint venture, a division, any governmental authority or any other entity or organization.

"Portable Digital Music Device" shall mean a portable digital music device (including, but not limited to, mobile-telephone and other mobile devices that may also operate on a wireless communications network) that is used for the storage and play/playback of digital music files (i.e., music files encoded in MP3, AAC, WMA or similar audio format).

"Secured Server" shall mean a secured server that is (a) located in the Territory, (b) owned and operated by Licensee or Licensee's vendor and (c) continuously protected by means of (i) physical security that meets or exceeds the prevailing physical security best practices in the industry and (ii) firewall and other digital security technology that meets or exceeds the prevailing digital security technology best practices in the industry.

"Service" shall mean the online service owned and operated by Licensee, as described more fully in Exhibit A hereto (hereby incorporated herein by this reference), which offers to Users, but is not limited to, Limited Music Downloads, Music Streams, Limited Video Downloads, Video Streams and/or Lyric Displays that are transmitted from Secured Servers to the Covered Devices of Users in accordance with the terms and conditions of this Agreement. The Service shall also include and incorporate the Lyric Search Service.

"Service-wide Music Plays" are the total number of instances where Users cause compositions (as embodied on Master Recordings) of third-party rights-owners contributing such compositions to the Service to be heard in their entirety on a Covered Device, when such content was originally delivered to the Covered Device as limited-use downloads.

"Service-wide Music Streams" shall mean the total number of encrypted digital transmissions from Secured Servers via the Service of compositions (as embodied on Master

Recordings) of third-party rights-owners contributing such compositions to the Service that allow Users to receive and listen to particular Master Recordings upon request at a time chosen by the User using streaming technology (including, without limitation, via Real Networks' RealAudio or Microsoft's Windows Media Audio formats) through the User's Covered Device, which transmissions will (a) not result in a substantially complete portable reproduction of such Master Recording (other than a temporary copy such as those used solely for caching or buffering) and (b) occur substantially contemporaneously with the play of the given Master Recording.

"Service-wide Video Plays" are the total number of instances where Users cause compositions (as embodied on A/V Master Recordings) of third-party rights-owners contributing such compositions to the Service to be heard and seen in their entirety on a Covered Device, when such content was originally delivered to the Covered Device as limited-use downloads.

"Service-wide Video Streams" shall mean the total number of encrypted digital transmissions from Secured Servers via the Service of compositions (as embodied on A/V Master Recordings) of third-party rights-owners contributing such compositions to the Service that allow Users to receive, view and listen to particular A/V Master Recordings upon request at a time chosen by the User using streaming technology (including, without limitation, via Real Networks' RealAudio or Microsoft's Windows Media Audio formats) through the User's Covered Device, which transmissions will (a) not result in a substantially complete portable reproduction of such A/V Master Recording (other than a temporary copy such as those used solely for caching or buffering) and (b) occur substantially contemporaneously with the play of the given A/V Master Recording.

"Territory" shall mean the United States, its possessions, territories, and military bases (the "USA"), except that solely with respect to the reproduction and distribution of Relevant Compositions and Underlying Compositions embodied in Digital Files as Limited Video Downloads and Video Streams, the "Territory" shall mean the USA and Canada. For purposes of this Agreement, distribution of a Digital File shall be deemed to occur within the Territory if either (a) the Secured Server from which the Digital File is distributed to the User is located in the USA, or (b) the Secured Server from which the Digital File is distributed to the User is located outside of the USA and the User receiving the Digital File resides in the USA and such User's Personal Computer is located in the USA. Notwithstanding the foregoing, the "Territory" with respect to Limited Music Downloads and Music Streams shall be deemed to include Canada solely with respect to those Compositions to the extent not licensed to Licensee through that certain agreement between Licensee, on the one hand, and CMRRA, on the other hand (such agreement is hereinafter referred to as the "CMRRA Agreement" and such Compositions are hereinafter referred to as the "Non­CMRRA Compositions").

"User" shall mean any individual who is a registered user of the Service, having agreed to Licensee's user agreement, and who is authorized by Licensee to access Limited Downloads, Streams, Limited Video Downloads and Video Streams, and/or any individual who uses the Service solely to access 30-second Music Streams or 30-second Video Streams, via the Service solely for personal, non-commercial use.

"Video Play" shall mean each instance whereby a User causes a Licensor Composition to be heard and seen in its entirety (as embodied on an A/V Master Recording) on a Covered