Should Songwriters Offer Royalty-Free Buyouts?

Buyers love the words 'royalty-free'. Creators, small businesses and producers want to pay once and stop thinking about the music. For a songwriter, offering that option means trading some future income for money now.

Whether that trade is worth it depends on the song and on the exact terms. Here is how to think it through.

What 'buyout' can mean

The word covers very different deals. Sound on Sound's library music series describes the classic library buyout as 'money up front to "buy you out" but gives no share of sync royalties later.' The Screen Composers Guild of Canada's guide for music creators defines a buyout more broadly: a creator giving up some or all of their rights in a work, and some or all of the royalties it will generate, in exchange for an upfront fee. It separates four kinds:

• Full copyright buyouts, where the creator transfers complete ownership.
• Limited copyright buyouts, where the creator keeps some rights, such as performing rights.
• Direct licence buyouts, a license for a project where the creator keeps the copyright.
• Writer's share buyouts, covering existing works only.

The kind to be careful with

Full buyouts can take more than money. The same Canadian guide warns that a full buyout 'prevents them from benefiting from any and all future exploitation of their work, including, but not limited to, the writer's share of their royalties', and that creators 'are often required to waive all moral rights', meaning 'they may not even be credited as the writers.' It also suggests that membership in SOCAN, Canada's PRO, 'provides a degree of protection against full buyouts.'

The Society of Composers & Lyricists raised the same alarm about clauses that say no further money, 'including without limitation, any synchronization fees or any royalties of any kind (including without limitation, public performance royalties)' will be owed to the composer. Its advice was to read carefully and to discuss any such clause with legal and other advisors.

Before agreeing to any buyout from an outside buyer, ask four questions. Does it transfer the copyright, or only license a use? Does it remove your credit? Does it touch your writer's share of performance royalties? Is it limited to one project, or open-ended? If a contract leaves you unsure, a music attorney is worth the fee.

A royalty-free license is a smaller trade

A royalty-free license sits much closer to the 'direct licence' end of that list. The buyer pays a one-time fee for broader use of the song, and you keep the copyright, your credit and the ability to license the song to others.

That is how Starchild's optional $99 Royalty Free add-on works. A buyer adds it on top of a base license, partners choose per song whether to offer it, and partners keep their copyright. Your 50% share of license revenue, minus payment processing fees, applies as it does with other licenses.

The case for and against

The arguments on each side are real, and they apply differently to different songs.

• For: money now. Sound on Sound notes the typical 'three-year delay between finishing your music and starting to see royalties.' A one-time fee arrives with the sale.
• For: a bigger audience. Video creators, podcasters and businesses often avoid music that comes with ongoing obligations. A royalty-free option makes your song usable to them.
• For: simplicity. For a song that suits background, content or brand use, a clean one-time deal may be the most realistic income it will ever see.
• Against: you may be selling future income cheaply. Sound on Sound points out that with buyouts 'you'll probably never see repeat uses from the same music' the way you can with royalty-based library deals.
• Against: it may conflict with other deals. CD Baby's DIY Musician guide explains that an exclusive library deal means the library 'is the only company allowed to represent your content.' If the song is signed to a publisher or exclusive library, check whether you can offer royalty-free use at all.
• Against: co-writers have a stake. A buyout option affects everyone who owns part of the song, so they should agree before you switch it on.

How to decide, song by song

You do not need one policy for your whole catalog. Sort songs by where their value is most likely to come from.

• Songs with strong artist-cut potential, a big chorus and a lyric an artist could build a single around: consider leaving the royalty-free option off, and let recording licenses and exclusives do the work.
• Songs that suit content and atmosphere, such as mood-driven or occasion songs that work well under video: these are good royalty-free candidates.
• Older songs that have sat quietly for a long time: a royalty-free option can bring them a new set of buyers.
• Anything under another agreement: check that agreement first.
• Then review. Once a song has some history, look at which licenses it actually sells and adjust. Our guide to pricing your songs for licensing shows how the royalty-free option fits with one-time licenses, exclusives and stems.

Sources

• Screen Composers Guild of Canada (musiccreator.ca): Contract Fundamentals, Clue in to Buyouts
• Society of Composers & Lyricists: New Buyout Clauses Raise Concerns for Music Creators
• Sound on Sound: All About Library Music, Part 10
• CD Baby DIY Musician: What to Know About Music Libraries and Sync Licensing