Master Class: Making Money from "Free"

Your music has value, even if you give it away
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Today’s musicians are often asked to give away their music for free. Fans, creatives, and even for-profit enterprises such as television studios, production houses, software companies, and other media ask for free uses of music.

Perhaps the best-known example of a music giveaway in recent memory is the month of free downloads that U2 and Apple offered, via iTunes, when U2 released Songs of Innocence last fall. It’s rumored that Apple actually paid the band for all of those downloads, believing that the promotion would be worth it for all concerned.

But most musicians are not Bono, and can’t necessarily afford to risk their livelihood by giving away what they create. One of the biggest issues that musicians navigate today is, how to promote music without devaluing it, because once anything is assigned a low value, it becomes pretty difficult to raise the price later.

Giveaway promotion on steroids: U2 made their album Songs of Innocence free to iTunes users for a month after its release. You can avoid this problem by giving your music value: Always require something in return for your music, even if it’s not a direct payment. Using the techniques below, you’ll ensure that your fans, potential licensees, and content creators attach value to your music. You'll find that you can even make money from “free” distribution of your music. Plus, you’ll get exposure, and you’ll motivate fans and clients to want to work with you in the future and keep coming back to you for music.

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GIVING YOUR MUSIC TO FANS FOR “FREE”

The biggest problem with giving away music to fans is, it’s hard to convince them to buy it after they’ve already received it. To avoid this problem, take a page from the videogame industry’s book and make your fans “unlock” the music by giving you something else of value in return.

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Game companies often invite people to download games for free, so the game can find its fans—those who will pay for the full game. The industry turns downloaders into customers (rather than freeloaders) by giving away just a single level, letting fans buy more abilities in the game, or providing just the beginning of a longer story. This free strategy only works if what you give away can lead to monetization in the future. Here are some specific techniques to use with your fans:

Provide Samples, not Singles. Try using techniques such as streaming, sharing a music video, adding audio bumpers to a non-streamed track, or giving away a demo or live version of the song rather than giving away what you’re trying to sell. We covered these strategies more fully in an Electronic Musician article in the July 2014 issue called “First One’s Free: Convince Fans to Buy Music You Give Away.” Read it at emusician.com.

Follow the step-by-step instructions to register your work with SoundExchange.Get Their Contact Details. Letting fans download your tracks in exchange for their email and other contact info is worthwhile if you maintain an e-mail list or if you tour. This allows you to reconnect with listeners later, so you can make them aware of your new music, merchandise, and patronage pages. Most mailing list software and websites like SquareSpace (squarespace.com) offer methods to provide a download link after people sign up on your list.

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Trade Social Actions for Tracks. Trading tweets or likes for tracks can be done by simply asking, or via services and applications that help you promote your work by sending the download link after fans take the action. The apps are a somewhat artificial way to boost your online activity, yet, if used in this way, can be considered a legitimate and different way to ask fans to promote you to their friends and followers— something you should be doing anyway.

Use Affiliates. Using services like Rhapsody’s affiliate program (Rhapsody.com/affiliate), you can provide fans with a special affiliate link to your song and get money for each person who signs up to use their service. This can make you as much, per signup, as you could get for selling an entire album.

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Provide Music as a Reward. Tracks are excellent rewards for crowdfunding sites such as Kickstarter (kickstarter.com) or Go-FundMe (gofundme.com), as well as patronage sites such as Patreon (patreon.com). While you don’t get paid for the track directly, you can use it as a reward to get pledges and patrons, which can be worth far more.

Remind Fans You’re Trying to Make a Living. Make sure your fans know that while you’re giving away individual tracks, you do need to make a living off of your music, and you would appreciate any purchases they make. Then, offer singles, albums, merchandise, or links to their patronage site. Another approach is to let people set the price for your music, all the way down to free, and see what they do. For those who have done this, on average the money earned is close to the retail price per album, or better.

LICENSING MUSIC FOR “FREE”?

When it comes to licensing your music, it’s important to make sure you own two copyrights: one in the song composition, and one for the sound recording. So when someone wants to use your music in a video for free, they’re asking you to give away not one, but two licensing opportunities.

When someone asks you to license your music for free, you should consider it just the start of negotiations. As the sales saying goes: “Never open with a discount.” You should always make it clear to them that there is a monetary cost for each license you grant, even if ultimately you let them use it for free or a substantially low cost. Start with a number that’s high enough that you feel comfortable, so if you do give away the music this time, you lay the groundwork for future agreements.

Also, take the time to understand the potential licensee’s project as well as you can before negotiating a fee. Find out whom you’re dealing with, the nature of their project, what they want to use the music for specifically, and who’s behind the production.

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Ask what the music budget is—a question that might make people feel less comfortable about asking you for free music; it could even prompt them to find some money for you. After learning all you can, a simple Google search might reveal that there are deep pockets behind the project. Ask whether they intend to sell their work, where they want to broadcast/ show it, and whether distribution will be worldwide or just local. All of these facts will help when you work out the contract.

Once you do your research, follow the steps below to get the most out of your licensing terms, even if you are offering your music gratis.

Question “Promotional Value.” Licensees will often say to you that their use of your music will help people discover you. In other words, the placement has a promotional value worth the cost of the license. You should be skeptical of this unless what they are providing is clearly written into the contract. To ensure you get promotional value, ask for as many of the terms below as possible:

• Artist and track info card shown on screen, so fans can find the song on their own.
• Album cover shown on the screen.
• Track info mentioned by the announcer.
• Tweets/social media mentions about the song (including specifics how many mentions and for how long they will service the song).
• Artist and track info added to the credits.
• Song added to the cue sheets for the Performance Rights Organization’s (PRO) performance royalties and backend revenue.

If someone asks to use your music for free in a placement but refuses to provide any of the above, then they aren’t serious about helping people discover your music and giving you promotion. Without firm commitments in writing, your can end up simply as background music. So, always work on adding these terms into your contract, whether you are getting paid monetarily or not.

Limit Your Terms. Savvy licensees will ask for “worldwide” and “perpetual” rights to your music. In other words, they want to be able to use it globally and forever without having to come back to you to pay additional money. Both of these terms cost extra money in a license negotiation. If the licensee wants to use your music for free, then you should build in as many of the limits and restrictions below as possible:

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Limited Time: The license should be for a limited time rather than “perpetual,” especially if you are allowing use of your music for free. Perpetual licenses block you from ever being able to offer an exclusive deal to other parties, and prevent you from making future deals on the same music with the same licensee. Because of this, perpetual licenses are usually worth more money than a limited-time license.

When fans or content creators post your music on YouTube, make sure they include links to your site, and places where listeners can purchase your music.Limited Use: Limit the use of your music to a specified purpose, such as a particular show or video. Or, limit the way that it can be used, such as on the air, but not for sale online or in a DVD. The more limited, the better it is for you in case they want to license your music for future purposes.

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Limited Area: Rather than give worldwide rights, restrict the use of the music to a specified area, like the U.S., so that if the project extends to other countries, the licensee will have to renegotiate another license with you.

Non-Exclusive: There’s no reason to grant a free license with an “exclusive use” clause. Giving exclusivity to your music blocks you from being able to license it to other parties. If you agree to exclusive rights, you may not only be letting the music be used for free, but you will also lose the chance to make other licensing money from it.

Make Use of Step-Up Deals. Independent films, shows, or projects may not have much of a music budget, but you can work a different kind of deal to help them with music while sharing in their success. A step-up deal starts out with low-fee or free use of your music, but grows in proportion to the success and revenue the project earns. These terms are included in your license agreement, which outlines the mechanics of paying out higher fees as the project’s revenue increases. This may require some trust in your clients, because you’ll need them to do some accounting to track the project’s revenue, as well as commit to paying you. But the advantage is that the license is only free to start; the agreement grows into one that pays at a rate that the licensee can afford.

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Backend Revenue: Get What You Deserve. One of the stronger arguments that television and movie production studios make about gratis placement concerns the backend revenues that you can get from performance royalties. These revenues generate whether they pay for the license or not, but some higher-profile shows and production companies suggest that this should mean that they can use your music for free or for less money because you will be paid elsewhere. Of course, higher-profile productions can afford to pay more money for royalties, and you should try to get some money for the use of your music—even if the amount is small—if only to point out that your music has real value.

For every song that you license out, you should make sure that you register the PA (Performing Arts) and SR (Sound Recording) copyrights for your music, and perform all of the performing rights organization (PRO) registrations. This includes composition registration, as well as Sound- Exchange and ISRC registrations. Otherwise, even if your song gets played on network television or within a movie, you won’t get any royalties.

Also, any licensee who suggests there are backend revenues for you to collect should provide proof they are sending in the required cue sheets that PRO organizations need in order to generate royalties for you. Ask them to send the cue sheets to you so you can verify them.

GIVING MUSIC TO CONTENT CREATORS

Today there are more content creators than ever making videos or using music in creative ways. Many of them don’t understand licensing or copyright laws, and they may inadvertently infringe on musicians’ copyrights.

Ignorance of copyright restrictions is no excuse for using your music without permission, or neglecting to pay copyright holders. But don’t overreact. If someone finds a creative use for your music and it’s getting views, don’t force them to take it down. If a piece of music becomes popular, then there are always ways to get something out of it, or even monetize it, depending on the platform. Consider the following ways to address these less-sophisticated users of your music:

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Use YouTube Content ID. The most common infringement from content creators is through YouTube. You can leverage the YouTube Content ID feature in order to monetize the use of your music. Rather than forcing the YouTuber to take the infringing content down, just upload your songs (and your videos in case someone’s using a clip from them) to the ContentID page (youtube.com/content_id_signup). It will allow you to choose whether you want infringing works to be taken down, allowed but tracked, or to pay you the advertising revenue that the video generates.

Links Equal Love. A website or web presence that uses your music can always send its audience your way. The easiest (and most trackable) way to do this is for them to provide links to you and your music. These links should include where to buy the track online as well so they can help drive sales.

Push Promotion. Similar to the licensing section above, any uses of your music should include links as well as social media mentions, tweets, blog entries, or other explicit coverage. These are much more active forms of promotion for your work than simple links. If you can leverage their fan or customer-base and reach a whole new audience, letting them use your music for free could bring you new fans and sales.

The bottom line is, remember that your music has value; otherwise, fans, licensees, and content creators wouldn’t be asking for it! The ability to sell your music is ideal, but even “free” can work for you if you make sure you get something for every track that you give away. Do all of this right, and there will be more business, revenue, and opportunities for you and your music in the future.

Randy Chertkow and Jason Feehan are authors of The Indie Band Survival Guide (St. Martin's/Griffin), now in its second edition.