Let’s start from the beginning on how the history of online producers came about for you to understand the concept of online beat licensing.

Back in the year 1999 In the era of illegal downloads music was getting leaked online due to peer-to-peer music mp3 file sharing through a website called Napster, it started to gain popularity amongst college students in the USA. Napster provided a platform for music lovers to download and share albums for free. 

In 2003 Apple launched iTunes Store with a price of $0.99 per song to help fight piracy, but online piracy was still at an all-time high with Frostwire and Limewire.

Other music services began to establish such as Pandora, Spotify, MySpace (for independent artists and producers to get recognized in the online space as well). 

while this was all happening A list Rappers/singers started releasing Mixtapes on other top A-list artists’ beats online and then it become free music for everyone on other growing music sites as well.

The problem became when music producers and writers were no longer getting paid for publishing/royalties since the music was free. Music producers started an alternative remedy of leasing beats to multiple artists since they were in the era of mixtapes and that’s how the business started.

From the year 2007, the era of digital beat leasing licensing platforms rose such as Soundclick, Airbit, Beatstars, Traktrain, Soundee, Beatbrokerz, and soundgine. These platforms made it easier for music producers to license and sell beats with instant download capabilities and using simple music licensing contracts terms, conditions for artists and producers to agree upon and maintain a good working relationship.

In this guide, we will explain the concept of beat licensing and particularly focus on the differences between Exclusive and Non-Exclusive Licenses. By the end of this guide, you will know everything there is to know about online beat licensing

The concept of beat licensing is easy to understand. A producer makes a beat instrumental then uploads it to their beat store. Any artist can buy these beats directly from the store and use them for their songs.

In exchange for their purchase, the producer will provide the artist with a license agreement. A document that grants the artist certain user rights to create and distribute a song.

This license agreement is legal proof that the producer has permitted them to use the beat. 

When an artist is signed to a label, the label usually collects the mechanical royalties and might choose to pay (a percentage of) it to the artist

Performance royalties are collected and paid out by Performing Rights Organisations (PRO’s), such as ASCAP or BMI in the US, PRS in the UK, MSCS in china, JASRAC in Japan, GEMA in Germany, IPRS in India, SACEM in France. SOCAN in Canada or SAMRO in South Africa. 

(Every country has its organization, check which one is yours) 

1st Songwriter Royalties (A.k.a. Writer’s Share)

2nd Publishing Royalties 

The PRO’s collect both of these royalties and divide them into two groups.

· $0.50 goes to Songwriter Royalties 

· $0.50 goes to Publishing Royalties. 

The $0.50 Songwriter Royalties will be paid out to the songwriters directly by the PRO. 

The other $0.50 publishing royalties will be paid out to a publishing company or publishing administrator. (more about this later). 

The songwriter royalties, also known as the ‘Writer’s share’ will always be paid out to the credited songwriters. Songwriter royalties apply to anyone that had creative input in a song. Producers, songwriters (lyricists), and sometimes even engineers. Generally, non-exclusive beat licenses are sold with 50% publishing and writer’s share.

This is usually not negotiable since the music part is the producers’ contribution to your song and is considered half of the song. The lyrics are considered the other half. It doesn’t matter if there happen to be multiple songwriters that contributed to the lyrics. In that case, this 50% should be divided between them. 

50% Producer

25% Writer 1 

25% Writer 2

As part of an exclusive rights deal, a different split between all creators could be negotiated. It all depends on the price and flexibility of the producer. 

While I generally stick to my 50%, some producers sometimes agree to the following example split. 

Example Exclusive Licenses:  

30% Producer 

35% Writer 1

35% Writer 2 

Unlike Songwriter royalties, Publishing can be assigned to outside entities called publishing companies. Most independent artists and producers will most likely not have a publishing deal, which means they’ll have to collect the publishing royalties themselves. 

Surprisingly, a lot of money is left on the table here. If you’re an independent artist or producer that is only signed up with a PRO and not with a Publishing Administrator, half of what you’ve earned is still waiting for you to collect. 

I’m personally using Songtrust services, which I’d recommend to any independent creator.  

In terms of licensing beats online–regardless of an exclusive or non-exclusive license–the percentage of publishing rights is generally the equivalent of the writer share. 

50% of writer’s share equals 50% publishing share.

This is a tricky topic and it goes way further than I can explain here. If you want to know the ins and outs concerning copyright, I suggest you dive deeper into Copyright Law using our good friend Google or consulting an actual attorney.  

Again, going forward, I’ll explain about copyright solely in regards to licensing beats online. We’re going to dismantle a song to its creators and copyright holders, hopefully making it clear to you who owns what. 

Let’s say you’re an artist and you went to search for beats on YouTube. You found one that you like and you head over to the producer’s website. You buy a license for that beat, write lyrics, create a song, and distribute it through CDBaby, TuneCore, or DistroKid.

That song contains two copyrighted elements: 

1st The Music

2nd The Lyrics 

The producer owns the copyright to the music and you own the copyright to the lyrics. 

Regardless of whether you’ve bought an Exclusive License or a Non-Exclusive license. The producer will always own the copyright to the music and the artist will always own the copyright to the lyrics (unless it’s written by someone else other than the artist). 

This is what we call Performing Arts Copyright (PA-Copyright).  

On a side note: Many believe that you have to register the music or the lyrics with the U.S. Copyright office yet, in fact, the instant you write something on paper, make a beat in your DAW or save a demo song to your hard drive, it’s copyrighted! 

Sure, there are benefits to properly registering with the U.S. Copyright office but, failure to do so doesn’t mean you will lose ownership over your creation. 

Sound Recording Copyright (SR-Copyright) 

Back to that song you made. Together with the producer, you’ve created a new song. In legal terms, this is often referred to as the “Master” or “Sound Recording”. 

Now, this is where things can confuse you because the difference between an Exclusive or Non-Exclusive license plays a huge role here. 

· If you have exclusively licensed a beat, you do own the master and sound recording rights. 

· If you have non-exclusively licensed a beat, you do not own the master and sound recording rights. 

In an exclusive license, the Master rights will be transferred to the client (artist) and it will become their sole property, free from any claims from the Producer. The only exception here is the producer’s right to jointly claim the copyright of the so-called ‘underlying musical composition’. This is what we referred to earlier as the PA-Copyright.

The producer is and always will be the original creator of the music. 

With a non-exclusive license, the client does not own the master or sound recording rights in the song. They’ve been licensed the right to use the beat and to commercially exploit the song based on the terms and conditions of the non-exclusive agreement. Yet again, they do own the PA Copyright of the lyrics. 

Instead, what they’ve created is called a Derivative Work.  

In regards to beat licensing, a derivative work is a combination of an original copyrighted work (the beat) in combination with someone else’s original work (the lyrics). Derivative works are very common in the music industry and you probably come across them daily. 

Examples are: 

· Remixes

· Translations (A Spanish version of an English song) 

· Parodies 

· Movies based on books (Harry Potter)  

These are all so-called ‘new versions’, created using preexisting copyrighted material. 

In terms of beat licensing, a non-exclusive agreement authorizes an artist to create such a ‘new version’, using the producer’s copyrighted material. The only person that can authorize a derivative work is the owner of the underlying composition itself. In this case, the producer. When someone licenses a beat on a non-exclusive basis, they’re specifically given the right to create a Derivative Work. 

By now, we’ve covered all the differences between non-exclusive and exclusive licenses. But, if you’re an artist, you might still wonder which option is the best for you. Besides the difference in price–in every way–an exclusive license is the better option. No doubt!  

However, this is not a necessity for everyone. Most artists are better off with a non-exclusive license.

· How many followers and fans do you have? 

· How many songs have you released to date? 

· What is the number of plays/stream you get on average? (all platforms combined) 

· How big is your marketing budget? 

· Are you getting financial support from a label or publisher? 

Ask yourself; What would be the best option for the artist you are TODAY? 

You see, most artists are simply not ready to buy exclusive rights yet. And there’s no shame in that at all. if you’re a young artist working on a mixtape or first album to get your name out there. Why would you spend that much money on exclusive rights if you’re not even sure if the record is going to get big?

The wise(r) investment would be to get one of the higher tier non-exclusive licenses. Preferably, the Unlimited Licenses. This allows you to spend less, buy more licenses, release more music and gradually build your fanbase until you’re ready to take that next step.

In the image below you’ll find a summary and comparison between Non-Exclusive and Exclusive Beat Licensing. Please note that the Non-Exclusive ‘Sales’ and ‘Streams’ limit does not apply to the “Unlimited” licenses. 

Non-Exclusive vs. Exclusive

Do my rights ever run out?

Great question, in most cases, unless you buy an exclusive, your license will last for 12 months or more, you’ll need to read the producer’s contracts for this information, most of the time I find that this is not published on most producer’s beat stores.

What is an Exclusive beat?

When you buy an exclusive beat license it means that you will be the last person to own the rights to the beat, if other artists have purchased a basic or unlimited license to that same beat their rights will be revoked when the terms of their license agreement terminate.

If you choose to purchase beats exclusively the price tag will be A LOT higher, typically from $250+, a common figure that I see most producers in the industry throughout is $500, so if buying beats online exclusively in the direction you want to go in for your project, be prepared to have some budget behind you.

What is my best option?

Generally, most artists will choose between Basic and Premium licenses for budgeting reasons, but in my experience, it’s very common that artists come back later and ask to negotiate rates for the exclusive beat, baring in mind that the artist would have purchased lease previously from me, this is when I am most likely to negotiate an exclusive deal.

What if buy a lease and then another artist buys the exclusive of the same beat?

I’ve had this question a lot and it is part and parcel of the industry, on my website (i can’t speak for others) the length of the lease will go into effect from the date of purchase, so if you were to buy a basic lease from me today and then tomorrow another artist buys the exclusive,

your rights will remain intact for the 12 months, but when the license term ends you will no longer be able to renew your lease or purchase the exclusive, so if you’re interested in buying exclusively, it’s better to not wait around.

How much does it cost to buy a beat?

It depends entirely on where and who you’re buying a beat from, some producers sell leases of beats from as little as $1.99, but others may charge up to $50 for a basic lease, there is no set price however there are some guides prices most producers usually follow, Starting at $20 to $200 depending on the lease level you buy.

What is an unlimited lease for a beat?

An unlimited lease or track outs lease is usually depending on the beat store you’re buying from is one the highest level leases that grants you (the artist) unlimited distribution and sales rights that you can buy without owning the exclusive rights to an instrumental