Hi everybody, I just registered to find an answer to a question that lately has been annoying me a lot:

Recently I bought an online space, the purpose was (and still is) to create a wide choice of musical pieces suitable for VideoGames (and secondary other kinds of projects).
Here is a brief description of the services the site will provide:


- you get an exclusive on the track(s) you choose. They won't be available for further works o projects), though they will still be available through Soundcloud and Bandcamp for listening and downloading;

Most websites like the one you're describing offer non-exclusive rights as a base option. Offering exclusive rights only is going to require a large amount of cues readily available. For example if you launch with 10 orchestral cues and five get snagged up for exclusive rights only then you've lost 50% of your orchestral inventory which could make you lose potential clients. This means you'll have to be able to put out a large number of high quality cues on top of servicing and customizing cues already purchased by current clients. Can you balance that kind of output? Besides most folks browsing library music are expecting non-exclusive rights.

Now, the real question is: royalties or "pay for track"?
We first wanted to ask for a 10% of the income that would derive from commercial projects, then we tried to think as developers and guessed that a royalty-based system would probably be unimplementable, as sometimes it's difficult to calculate percentages on entries, also we wouldn't be able to verify the status of sold copies nor the commercial purpose of a project (we'd provide a royalty free service for non-profitable projects so I guess everyone would contact us asking for a free service).
The other idea is to provide a commercial license at a certain price per track: e.g. 30$ and you can use "trackname" in your project and have all our services.
Which payment type do you think would be the best?
Any other ideas? Thanks in advance!

First off $30 for exclusive rights to a full track is ridiculously cheap. Now it's your call to charge what you feel is appropriate and fair but let me throw out some things for you to consider:

1) Do you want to be one of the cheapest music suppliers out there? Being the cheapest can get you attention but not always the best or positive type of attention. Just as I don't go out and buy cheapest TV I can find - I also don't want to hire the cheapest freelancers I can find. In other words you pay for what you get. BMW, Mac and Rolex watches are very expensive. You can find cheaper solutions all over the place - but yet these three companies still do a great business. Striving to be the cheapest (or one of the cheapest) is hardly ever a good business model, in my opinion. Instead strive to be the best and fill a unique niche as well as provide amazing client (customer) service.

You don't want to undersell yourself, trust me. At first it might seem okay but once you get a client with really high expectations that ends up taking up hours and hours of your time... $30 is going fill like a really bad RoI.

2) What happens if a client wants 5 different revisions and ends up taking a good deal more of your time? Does he still just pay $30 or 10%? Is there any scale to your business model that allows for more demanding clients/projects?

3) Where do you want your business to be in five years? What about ten? What type of income do you hope to be making in that period of time and how does your starting point of $30 per track fit into that picture?

4) And depending on the way the game is distributed, it can be very easy to calculate number of sales then figure out what your 10% royalty would be for that quarter. I've done it before. But again, your business model seems to lack scale. What happens if project X licenses out 6 songs but license Y only licensed 1 song. You don't specify if the 10% royalty is per licensed cue or not. And if it is per licensed cue then project X stands to pay out 60% of sales. Likewise if it's a flat rate of 10% regardless of number of cues licensed it out - it doesn't scale and then you could be doing more work for the same rate. Wow.. that got real wordy real fast. Hopefully it made sense. What I'd suggest is doing both. Charge a per song fee for the license then take a flat rate percentage. This way if the game completely tanks and makes zero sales - you've made some income at least.

To be honest I think your plan needs some tweaking and some thought to the big picture (i.e. where you want to be in X years, etc) would really help you set things up better.

Thanks,

Nate

Yep Nathans right on the money.

There are two kinds of clients. The kind that don't have much of a music budget so turn to libraries because it is what they can afford and the kind that have a budget and want a high quality product.

What you are proposing wouldnt really support either client type. You'll discover soon that you'll need to charge substantially more for exclusive rights and custom work. Your new realistic rate would not be something most library browsers could afford. The client that can afford it would rather find an artist they respect and impresses them over the cold business vibe laibraries provide.

I would suggest either going for a standard non exclusive rights library or sell yourself as an individual artist.