Hello, I'm currently in a pickle with a potential composer. We have commissioned him to make custom music for our game but is not comfortable with giving us the rights to the music. It was my understanding that when hiring freelance work like this, the rights to the work go to the person hiring (in this case, my team), but I've talked to a few other musicians and some of them are also keen on keeping the rights to their music. The team's biggest concern is that if we don't have the rights, the composer could, at any time, revoke those rights, and kill the game. Or he could sell/give the rights to someone else and they could revoke our rights and kill the game. Or even just let other people use music that we commissioned. Am I missing something or is there anything we can do to compromise on this situation?
Music Rights
As for specifics, there's a big difference between ownership and licensing (the waiving of rights). There's also a spectrum of licensing deals.
They can retail ownership, but grant you a non-exclusive licence to distribute the music as part of a specific product. That leaves them the possibility to also sell it to other people, but they can't stop you from using it in your product.
It sounds like you don't have a lawyer or any contracts in place. As a super quick fix for that, go to http://docontract.com and make one that suits you both. If they don't like the terms of the contract, then negotiate and make a new one that you both agree with.
Can licenses be revoked? So say, for some reason, our composer stops liking us in the future, could he revoke the license and make our game unsellable?
Could he also agree to give us recording rights to any of the songs that we use in our final product and would that protect us from anyone trying to make our game unsellable?
Can licenses be revoked?
They can be revoked if the license agreements say they can be revoked. I doubt there is a clause allowing revoking of the license, but nothing prevents them from putting it in there.
There are several things I've usually seen stated; the duration, the exclusivity, the location, the media, and the count.
So the musician may offer a perpetual non-exclusive worldwide license with unlimited distribution in games, marketing, and related business uses. If you use it for different purposes you'd need a new, additional agreement.
A photographer may offer a non-exclusive license for up to 100,000 magazine print copies through North America and Europe, no larger than a quarter page or 5"x6", to be published within one calendar year of the date the agreement is signed. If they print more magazines, or want to distribute to Australia or other locations, or want to print it as a full-sheet spread, or want to print it after one year, then they'll need a new, additional agreement.
If the license you negotiate says it is a perpetual license then that's it, you've got it forever. You'll want to make sure it also gets passed along to your successors or assigned parties to allow for your company or product to be bought out. A good lawyer can help you get the wording exactly right.
Generally exclusive rights are far more expensive because they cannot be used for other purposes. If they do sell exclusive rights, they'll typically include a clause stating that they can use the material in their own portfolio and marketing materials.
Your lawyer can tell you exactly what needs to be in there and why.
Could he also agree to give us recording rights to any of the songs
Again, that's a detail for the agreement.
You'll need to mention derivative works, meaning you can make Your Game 2.0 with music by a different composer that is in a similar style.
You'll want to discuss use of the score additional recordings, in case you end up with Your Game Gold Edition featuring a symphonic recording of the music.
Both of these are examples of why it is critically important to have a lawyer involved. Let's say your game does extremely well and a major publisher wants to buy it, or a major company wants to buy your studio. If the license agreements are wrong, perhaps they don't allow assignment to successor companies, the purchaser may back out of the deal after reviewing the contracts.
I've read about many cases and even seen one first-hand where business purchases were cancelled after doing due-diligence and reviewing the legal agreements. Some critical elements were missing from contracts that could not easily be remedied so they company abandons the deal entirely. Otherwise, it is common for corporate purchases to include new agreements with everybody at the company re-assigning all the rights, just as a legal safety measure.
Composer licenses have a bunch of different structures, and I gave a talk on the subject a while back (actually I somehow end up talking about licensing music in games quite a bit, but these are the recorded ones, so have fun):
Summarizing:
You can go a few routes, based on the facts you presented:
non-exclusive, perpetual, universal, irrevocable, transferable, sublicensable
exclusive, perpetual (or term), universal, irrevocable, transferable, sublicensable
exclusive, term, universal, irrevocable, non-transferable, sublicensable
etc. etc. How you structure your license really depends on what you plan on doing with the music. If you want to release a soundtrack, for example, you'll want exclusive, perpetual rights, as you won't want that music to be available elsewhere.
If the contract is limited in term, this generally won't apply to copies that have already sold, but you'd basically have to pull the game at the end of the term.
Ultimately this will come down to your leverage and both parties understanding the licensing terms. I'm generally against templates for something like this, because that often results in a situation where neither party is 100% clear on the actual license terms. If you're willing to invest in a composer, you should invest in a lawyer to draft your composer agreement.
Just to add a musician's perspective here: unlike when an artist creates a character or environment for a game, the music can be enjoyed outside the game. Therefore a musician likes to have the opportunity to sell the music and get an additional revenue stream from that, especially since games don't tend to pay any other sort of royalties. On the one hand, you could view this as revenue you're missing out on, but on the other hand, it's potentially additional exposure for your game, as well as showing goodwill towards the composer.
There is another issue you might want to consider, and that is YouTube's ContentID. Musicians who keep their own rights will often have them the tracks registered with ContentID so that their publisher/collections agency can collect royalties on anyone who uploads their tracks to YouTube. However, this can - and often does - mean that anyone doing a video review of your game on YouTube can also find their video is flagged up as containing copyrighted content (which it does) and their ad revenue will also go to your musician (and their agency). If you think video reviews of your game are likely to happen, you will want to discuss this possibility with the composer.
Just to add a musician's perspective here: unlike when an artist creates a character or environment for a game, the music can be enjoyed outside the game. Therefore a musician likes to have the opportunity to sell the music and get an additional revenue stream from that, especially since games don't tend to pay any other sort of royalties. On the one hand, you could view this as revenue you're missing out on, but on the other hand, it's potentially additional exposure for your game, as well as showing goodwill towards the composer.
If the musician negotiates for those rights, the contract should also include the right to mention the game's title in conjunction with any soundtrack release.
I'll definitely be passing around Mona's videos! Such great stuff.
Regarding your original question:
It is very common for indie games (low-budget) to license the music rather than buy it outright (commission it as a work for hire) in order to keep the price low. That is, if you are going to completely own the work created (Work For Hire), that will cost a lot more than letting the composer retain ownership through either an exclusive or non-exclusive license.
Obviously, the more the composer keeps, the lower a fee they will generally be willing to charge.
Note that for professionally produced games, almost all work is done as a "Work for Hire." But the composing fees there are commensurately higher (generally starting at $1000/minute of finished music and going up from there).
For example, in the Game Audio Industry Survey from 2016, Indy game composers frequently charge $100/minute for music, but are also far more likely to deliver music on a licensed basis. (97% of AAA games are done as Work for Hire, while only 45% of indie game composers reported that they delivered music as Work for Hire (55% licensing instead).
