28 Jan

Royalties and control vs buyout and lump sum fee: a Case Study

European film and TV composer David learned the hard way in his negotiation  with a major international video streaming service

David is a well-known and successful film composer who has been writing music for documentaries and movies for more than ten years. In 2020 he experienced a new kind of contract negotiation with a major international video-on-demand streaming service.

David was asked to compose the music for a number of episodes of a major TV show. As part of the early negotiations, he requested a script so that he could come up with some early theme ideas to give the company an indication of what he had in mind.

When he received an enthusiastic response to these initial composition themes, the contract negotiations started.

David has for many years been used to terms that provide what he considers fair remuneration and, just as important to him, control over future uses of his music. This new deal struck him as very different.

David was offered an upfront lump sum fee far below what he was used to and what he considered a fair reflection of the value of his work. With this came a 50/50 publishing deal offering him a half share of an agreed royalty rate. “That was no surprise, but they also asked for all rights to use this music, not only in this TV series, but also for all other kinds of platforms and films. They insisted on owning all the stuff I was doing, for whatever purposes they wanted. That was a new thing”.

Economic and moral rights at stake

The contract would affect David’s economic and moral rights, denying him any control over derivative and transformational uses of the music. He would have to forego ownership of all the original stems and textures created by him. The service would be able to use the music in any other productions without his permission and to commission another composer to create new compositions using his work as a foundation.

Additionally, the company would not let him release the music on streaming services, which he had done with other projects. If this had been allowed, he believes it would have prevented the company using this work elsewhere. David knows there are economic upsides and downsides to this, but most of all he wanted the right to free choice over uses of his music.

“I would still get paid my 50% share if they use my music in other films but they get the original stems to re-mix the track and to make new compositions from my stems”.

David is normally used to releasing his compositions as a standalone soundtrack on music streaming platforms. “I’m a team player and I usually work closely with directors and producers and then release some of my stems on music services.” This was not of interest to the new buyer which would itself want the rights over any future sound track.

“This is a new level of control of the rights that I’m not used to. But it is the companies that have the power. Everyone wants to watch video streaming services right now so they can take advantage of that.

“It’s a new level of control of the rights that I’m not used to”

“For me, this feels like a sellout. All the sounds I’ve been working on, they can use them as a library. Why would they need to call us again for another piece of work?

Despite being unhappy with the deal on offer, the composer realized he wasn’t going to get anything better when it came to his ownership rights. So he insisted that, if he was to hand over his rights, he should at least get a fair upfront payment in return. After more negotiations, bringing in an experienced agent, the streaming company agreed a slightly higher fee.

He felt he had little choice but to accept the deal because he had already composed all the main themes, so without signing he would have undertaken this work for nothing. “It was clear we couldn’t change anything in this deal. The only answer in this case was to demand a higher upfront fee”.

David knows that in today’s globalized market, buyout deals are becoming increasingly common. He also knows many composers would prefer the security of an upfront deal in the knowledge they will get some compensation even if the show or documentary fails. “I’m not naïve and I understand that point of view. I know a new dawn is coming as well, it’s not the same as it was before”.

Buyout deals have always been more prevalent in the US than in Europe, subjecting the composer to a work-for-hire agreement where they only receive a one-off flat fee and give the company all the rights to the music.

In Europe, composers are normally better protected since they can assign their rights to their local authors society (or collective management organisation) which helps in their negotiation and collects royalties on their behalf. This guarantees the composer a 100% of the royalty collected. However, this assignment of rights would be “circumvented” by the new kind of 50/50 publishing deal requiring the composer to surrender half of their royalties to the streaming platform or producer.

David’s deal negotiations happened against the backdrop of the COVID-19 pandemic, which forced the closure of cinemas around the world and increased the need for film composers to seek work from video streaming businesses.

“I’m not naïve, I know a new wind is blowing. But we have to talk more about this”

Rather than lose control over his music, the composer says he would always prefer to receive a more modest initial fee for his composition, but to keep the rights, even though this carries a financial risk because the project might not be commercially successful. He compares this recent experience with another recent commission for a feature film that was given a traditional cinema release. Besides the fee, he received royalties on movie ticket sales, could release the soundtrack and retained his rights for future exploitation.

David believes that in the 2020 project, he was forced to sign an agreement that gave up the rights to his music “otherwise I couldn’t have got the job”. He feels his moral rights are breached, just as much as his economic rights. “They could sell the rights to my music to another company. It could be in a porn movie. I have no control,” he says.

David says he doesn’t have a quick fix solution. “I know a new wind is blowing. But we must talk about this more and understand what is going on”.

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