Last Updated: March 1st, 2022



Licensing beats has been around since before musicians could customize a MySpace page or beat producers were uploading on SoundCloud. It was a niche market that started out with a couple thousand producers on websites like SoundClick and ReverbNation. Over the years, the online beat leasing market has evolved, to include such platforms as BeatStars, Airbit, and Soundee.


Today, anyone can put together a web page from his or her home and sell beats, if they choose. But, licensing beats is serious business.


The online beat selling and music marketing community is led by producers, Gabe "Legion" Schillinger, Robin Wesley, and Adam Ivy. Each becoming successful through applying their own particular and dedicated advertising strategy for growing an online presence and improving website traffic.


They will be referenced for the following guide focusing on beat leasing and the differences between Exclusive and Non-Exclusive licenses. Both concepts explained from the perspectives of the artist or buyer and the beat maker or seller.


This document will provide a summary of everything to understand about online beat leasing. 📃



Section 1: Beat Leasing Explained





The idea of beat leasing is a simple concept. A producer makes a beat then uploads it to a beat store. An artist can buy these beats directly from the store and use it for their own songs.


A beat lease agreement allows an artist to incorporate a producer’s instrumental beat into a new recording by that artist. In a Beat Lease Agreement the producer maintains full ownership of the copyright in the beat while giving the artist either an exclusive or non-exclusive license to use the beat


The license contract is legal proof the producer allows use of the beat to that artist.



Free beats are usually for non-profit use unless otherwise noted with visible and referable agreement terms or where legal proof of permission is granted.


Adjust your understanding of the common terms “buying beats” and “selling beats”. The product we’re talking about here is not the beat on its own and is, instead, a license agreement.



Non-Exclusive Beat Licensing



Non-exclusive licensing, also known as ‘leasing’, is the most common form of beat licensing. You can buy a non-exclusive license agreement to release a song on most available streaming platform or create a music video for YouTube, and make money from it! 🤑


These lease options are available with the producers beat store and are granted upon purchase.


The license agreement is auto-generated or manually filled with the buyer’s name, address, a timestamp (Effective Date), the user-rights, and the information of the producer.


With a non-exclusive license, the producer grants the artist permission to use the beat to create a song of their own and distribute it online. The producer retains copyright ownership, and the musician must adhere to the rights granted in the agreement.



Non-Exclusive Licenses Types



Most producers offer a variety of non-exclusive license options for .mp3, .wav, or tracked-out audio file formats.


Every lease comes with its own unique user-rights listed by the producer or website the beat(s) are acquired from.


As the price of a license goes up, user rights – such as getting a better quality product – can go up with them. A more expensive license may come with higher quality audio formats.


The license option choice is dependent on the individual artist(s) publishing needs and/or level of experience.



Non-Exclusive Licenses Limitations



Most music and non-exclusive licenses have terms limiting the number of sales, plays, streams, etc. An example of a non-exclusive license is that it is only allowed to have 50,000 streams on Spotify or 100,000 on YouTube.


A non-exclusive license may also have an expiration date. Meaning that it's valid for a finite period of time. After the contract period is due, the buyer has to renew the license by purchasing a new one.


The license may need to be renewed when the buyer reaches a maximum amount of streams and/or plays. Even if it is before the contracts expiration date.


Since these licenses are non-exclusive, a single beat can be licensed to an unlimited number of different artists. This means that several artists could be using the same beat for a different song under similar license terms.


It depends on which stage of the artist’s career they’re in when they get the license. An artist in the beginning would be best served with a non-exclusive license while a mid-career artist or artist that is on the verge of blowing up might be better served with an exclusive license.



Exclusive Beat Licensing



With exclusive rights there are few limitations on user-rights, meaning that any artist can exploit the song to the maximum.


There is no limit on number of streams, plays, sales, downloads, or expiration date on the contract.


The song may also be used in numerous different projects. Singles, albums, music videos, etc. While non-exclusive license are, generally, used for lower budget releases.


When buying the exclusive rights to a beat that was previously (non-exclusively) licensed to other artists, the artist that purchased the exclusive rights is usually the last to purchase it. Once a beat is sold exclusively, the producer(s) are no longer permitted to sell or lease the beat elsewhere.


Purchasing custom exclusive rights for a beat that is made specifically for you will ensure that no other artist have had or will have the opportunity to use that same beat(s) that you have requested. Once a beat is sold exclusively, the producer(s) are no longer permitted to sell or lease the beat elsewhere.


There should be a section within the contract that states whether non-exclusive rights were purchased. Every exclusive contract should have a section with a “notice of outstanding clients” included.


This section protects these previous licensees from getting a strike by the exclusive buyer.





There are numerous differences between Exclusive Licenses and Non-Exclusive Licenses, as well as the issue of royalties.


We will take a closer look at the role of money in the creative world.



Two approaches to selling Exclusive Rights



Producers have been coming up with different ways of selling exclusive rights. More recently, contracts are becoming better streamlined and matching the current industry standard.


Here are two primary ways of selling exclusive leases.

  1. Selling exclusive rights
  2. Selling exclusive ownership


Selling exclusive licensing, the producer remains the original author and always have the right to receive writers share and publishing fees.


Selling exclusive ownership, the producer sells the beat, along with interest, authorship, copyright, etc. These "work-for-hire" deals allow artists to retain actual ownership over the beat.


Within the beat licensing industry, selling exclusive ownership is considered wrong and should avoided–because it runs afoul of Copyright law.


Not all music producers are signed to record labels and its not always the case that music producers have to be signed to record labels to work with them. They can work as independent contractors that can be hired from time to time. The artist and producer can come to an agreement where both re credited for their work; Legally, financially and commercially.



Example Pricing Tables ⬇️





Section 2: Royalties, Writers Shares, and Publishing Rights





This is the most confusing part of the music industry; however, there are lots of different music deals and structures out there.


A step-by-step examination shows one thing at a time regarding online "beat-licensing".


Understand the two types of royalties:

  1. Mechanical Royalties
    Mechanical royalties are generated when music is physically or digitally reproduced, such as in a physical CD, or distributed digitally. Such sales are referred to as "manufactured."​​

  2. Performance Royalties
    Performance royalties are generated after an artist performs a song in a public setting. An artist would get paid royalties after a song was played on a radio, performed live, or streamed.​


What are Mechanical Royalties?



When artists are granted a mechanical license they have the opportunity to keep 100% of the mechanical royalties in exchange for their price. Determined by whether the license is non-exclusive or exclusive.


Available distribution services such as TuneCore, CDBaby or DistroKid pay these mechanical royalties directly to artists. If they are independent.


If the artist is signed to a label, usually the label will collect the mechanical royalties and distribute a certain percentage of it to the artist(s).





Advances against Mechanical Royalties in Exclusive Agreements



“in most cases” the artist collects 100%; however, there’s an exception which is to be applied in some instances, which will happen within some terms.


Some producers require a share or percentage of the mechanical royalties in their exclusive agreements. It may range anywhere from 1%-10%.


This is known as ‘points’ or ‘producer royalties’.


In this scenario, the price paid for the exclusive rights is considered an “advance against mechanical royalties,” and will be paid based on a formula that takes into account the Net Profit of a song. This formula deducts all costs (and can include costs of publishing, recording, and manufacturing) may be deducted first before the producer gets his cut.


The following example illustrates what might happen in a real-life situation:


∙A company or artist pay $1,000 USD in advance against royalties to a producer. The producers mechanical royalty rate is set to 3%.


The artist's profits:

$1,000 - Exclusive Rights

$ 500 - Studio time

+ 500 - Mixing & mastering song(s)

$2,000 = Total Expenses


$10,000 in mechanical royalties can be generated after a year!


Net Profit: $10,000 – $2,000 expenses = $8,000 💵


The Producer's Cut: 3% of $8,000 = $240 💵


As an independent musician, $8,000 is a decent amount of money to gain as mechanical royalties. $240 is to be paid to the producer(s).



Why an Advance against Royalties?



There is a purpose for producers to sell exclusive rights with an advance against royalties.


Classic pricing for selling exclusive rights ranged between $2,000 – $10,000.


Beat making has become an easier process or hobby to undertake, so, pricing for has dropped or cheapened to match the amount of competition that exist between the growing producer community.


However, if a song is to "blow up" or "go viral", an advance against royalties can offer the solution.


It’s an insurance for the producer in the event that a song does well. It’s also something the artist only has to worry about as soon as the song starts generating serious revenue.



Who collects performance royalties?



Performance royalties are collected and paid out by Performing Rights Organizations (PRO’s), such as ASCAP or BMI in the US or PRS in the UK.


("Click Here" to check which organization is in your country)


Royalties are divided into two parts:

  1. Songwriter Royalties (a.k.a. Writer’s Share)
  2. Publishing Royalties


The PRO’s collect both of these royalties and divide them into two groups.


For every $1 earned on Performance Royalties:

∙$0.50 goes to Songwriter Royalties

∙$0.50 goes to Publishing Royalties.


The $0.50 Songwriter Royalties will be paid out to the songwriters directly by the PRO.


The other $0.50 publishing royalties will be paid out to a publishing company or publishing administrator.



Songwriter and publishers royalties.



The songwriter royalties are known as the ‘writer’s share(s)’ are paid out to the credited songwriters. This part can not be sold through exclusive licensing, beyond work-for-hire agreements.


Copyright law considers the producer as a ‘songwriter’, too. ✍🏼


Songwriter's royalties apply to any person(s) that had creative input in a song, e.g. songwriters, producer(s), an engineer, etc.


Some non-exclusive beat licenses might be sold with a percent of both publishing and writers share being owed to the producer (usually 50%). This is understood to be non-negotiable because that beat is the producers contribution to your song. The lyrics are considered the other portion of the song.


If there happens to be multiple songwriters that contributed to the song lyrics, that remaining portion should be divided between them. In some cases, a producer may be compensated, additionally, for contributions to the lyrics.



Example Non-Exclusive Licenses:

∙50% to producer

∙25% to writer 1

∙25% to writer 2



With exclusive beat licenses, different splits between all creators could be negotiated depending on the price and malleability of the producer.



Example Exclusive Licenses:

∙30% to producer

∙35% to writer 1

∙35% to writer 2



Publication Royalties



Publishing royalties can be collected for a producer through a publishing company. Most independent artists and producers collect their own publication royalties.


Signing up with a publishing administrator like SongTrust services, in addition to a PRO, can lead to more missed earnings can be collected.


Licensing beats online–whether exclusive or non-exclusive lease–the percentage of publishing rights is generally the equivalent of the writers share.


50% of writers share = 50% publishing share.



Section 3: Copyright and Ownership





This is a complicated subject, and requires a literate understanding of copyright law that is best interpreted by an attorney.


We'll review copyright in regards to licensing beats online. Here we disassemble a song to its creators and copyright holders, as it will become much clearer to who owns what.



Performing Arts Copyright (PA-Copyright)



Suppose you’re an rapper and you want to make a song; you go on YouTube to search for beats. You find one you like and you head over to the producer’s website to purchase a license to that beat. You write your own lyrics, create your own song and upload it for digital distribution.


That song contains the two musical elements:

  1. The Music
  2. The Lyrics


The producer owns the copyright to the music and you own the copyright to the lyrics.


Regardless whether exclusive license or non-exclusive license, the producer will always own the copyright to the music and the artist will always own the copyright to the lyrics (unless it’s written by someone else other than the artist).


This is called Performing Arts Copyright (PA-Copyright).


NOTE: You do not have to register the music or the lyrics with the U.S. Copyright office yet. The instant you write something on paper, make a beat in your DAW, or save a demo song to your hard drive, it’s copyrighted!


A copyright registration is the only way to ensure that you retain a copyright over your work, but your failure to properly register doesn’t mean you will lose ownership over your work.



Sound Recording Copyright (SR-Copyright)



The legal term(s) for the finished song completed with the producer is referred to as the “Master” or “Sound Recording”.


Here is where the difference between an exclusive or non-exclusive license becomes more apparent.


As an artist, buying beats from a producer:

∙If you have exclusively licensed a beat, you do own the master and sound recording rights.

∙If you have non-exclusively licensed a beat, you do not own the master and sound recording rights.


With exclusive licenses, master rights are transferred to the client (artist) and it will become their sole property, free from any claims from the producer(s).


The exception is the producer’s right to jointly claim the copyright of the so-called ‘underlying musical composition’. This was referenced earlier as the PA-Copyright. The producer is and always will be the original creator of the music.


The client does not own the master or sound recording rights in the song with a non-exclusive license. They are leased the right to use the beat and the ability to commercially exploit the song based on the terms and conditions of the agreement. They own the PA Copyright of the lyrics.


What they've created becomes a Derivative Work.



Derivative Work



A derivative work is a combination of an original copyrighted work (the beat) in combination with someone else’s original work (the lyrics).


Examples are:

∙Remixes

∙Translations (A Spanish version of an English song)

∙Parodies

∙Movies based on books (Harry Potter)


These are 'versions’ or 'renditions', created using preexisting copyrighted material.


A non-exclusive beat leasing agreement authorizes an artist to create such a 'version’, using the producers copyrighted material.


Only people authorized by the author can create a derivative work. In this case, the producer is the one to do so.


When someone licenses a beat with non-exclusive terms, they can create a derivative work.



Beats containing third party samples



A popular misconception when creating beats with samples is to believe that it is the artist purchasing the lease that “clears the sample" for use in the beat.


This is incorrect.


There are two different versions that derived from the original sample. (Version AB and Version ABC)


Both these versions are considered a new work and both contain the original sample–clearance for Version AB will not apply to Version ABC.


A producer is required to clear the sample. If an artist makes a song, that individual will also need to clear the sample for their song. That makes 3 copyright owners.





Exclusive vs. Non-Exclusive



Which is the best license for you?


This is completely dependent on the artist(s) experience and/or publishing need.


Consider the following:

∙How strong is your online presence on Social Media?

∙How many followers and fans do you have on Twitter, TikTok, Instagram, Facebook, Youtube, etc?

∙How many blogs or platforms are you a regular contributor to?

∙How many songs have you released to date?

∙What is the number of plays/stream you receive on average?

∙What is your marketing budget (if applicable)?

∙How large and common is your financial income support?


Many artists don't require exclusive rights working on a mixtape or first album to get exposure.


Review more premium tier deals for the non-exclusive options. Spend less to release more music and build a fanbase.





Differences between exclusive and non-exclusive licenses.



In the Image below, you’ll find a summary and comparison between Non-Exclusive and Exclusive beat licensing.


NOTE: Non-Exclusive ‘Sells’ and ‘Streams’ limits do not apply to the “Unlimited” licenses.



Section 4: FAQ; About Beat Leasing





Periodically updated to provide answers to the most frequently asked questions concerning beat licensing.



I want to license a beat already sold to another artist. Can I ask the purchaser to sell me the license?



No, that’s not an option. The original buyer is not able to sell or lease the beat to an additional buyer.

These lease options are available with the producers beat store and are granted upon purchase.


Exclusive contracts will state that a beat cannot be resold or licensed to a third party in its original form, and if it’s not overlaid with lyrics. To do so would be a breach of the exclusive agreement.



Someone wants to buy a beat I already sold and asks if I can create a similar one. Can I?



If defining “similar” as using parts of the first beat or replicating melodies used, then NO. This is considered bad practice.


However, using a similar song structure, or similar instruments, with different chords and melodies, then YES. It’s possible to do that.



I purchased a non-exclusive license for a beat, and then someone else bought it exclusively. What happens to my song?



Your license will be in effect as long as you don’t exceed the maximum amount of streams or plays.


In your contract, you’ll have an “effective date” and an “expiration date” (The effective date should be the day you purchased the license, and the expiration date could mean a fixed time period . e.g. 5 years).


Contained in an exclusive lease with the buyer, a so-called “notice of outstanding clients” will protect you from the exclusive buyer to strike you.



My non-exclusive license is at its streaming limit or ending, but there are no new license options available because the beat was purchased exclusively. Do I have to take the song down?



If your non-exclusive license is running out and you can’t extend it, that yes––legally, you’ll have to take down that content.


To avoid situations like these, unlimited leasing options are better, if available.



Someone used my beat and didn't purchase a license? What can I do about it?



This is common among selling beats online. There are various ways to go about approaching this. The first step is to reach out to the artist(s) and notify them about the unauthorized use of the beat.


The two direct options are to:

  1. Purchase a license so they can maintain the song online
  2. Remove the material from all platforms where it currently exists


If all terms and conditions are not adhered to, you have two alternatives:

  1. Do nothing
  2. File for a DMCA takedown


If the songs doesn’t really merit airplay, and it’s of poor quality, it may be best to let it go. It's not worth the energy, time, or money.


To file a DMCA take down under the “Fair Use” rule, will cost. It's only consider a song is gaining impressive numbers.



I collaborated with another producer. How do we split the royalties and profit shares?



Collaboration splits are very common these days. There’s no quick answer to the question of whether they’re OK in every situation. That depend on the context and terms of the collaboration.


If you’re collaborating with a producer and you upload that beat to your beat store, the most common split would be 50/50. That includes sales, publishing, and songwriter share.


When the beat is sold or licensed to an artist, they’re usually granted 50% of the publishing and writers share to the song they make. Exact numbers might be different as it depends on the contract terms the producer offers.


Split Example:

∙Producer 1: 25%

∙Producer 2: 25%

∙Artist: 50%



Section 5: Comments





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