For the recording artist who doesn’t have a production team or the producer looking for recording artists, YouTube and online marketplaces such as BeatStars provide an avenue for them to connect without ever having to meet. Artists can filter through instrumentals uploaded by producers on these websites according to bpm, mood, or even an artist’s sound they want to emulate. After finding an instrumental they like, the artist can then pay an amount based on the type of license they want. However, like any contract, each type of license has certain legal implications that both entities should understand.

The two primary types of agreements you can find on these websites are leases and exclusive licenses. Oftentimes, an artist will lease a beat because it is the cheapest option. In fact, Lil Nas X leased the instrumental for Old Town Road, the 5th most streamed song on Spotify in 2019, from Beatstars for $30 from producer, YoungKio. However, the standard form contracts for leases that are on websites such as Beatstars greatly limit the rights of artists leasing these beats. On top of that, the lease means that the beat remains open for other artists to use because the artist does not receive exclusive rights to the instrumental – thus limiting the exclusivity of the sound.

Other restrictions on the lease may often include provisions that:

restrict the finished track from being used for commercial purposes,
limit the finished track to a certain number of plays/streams,
restrict the song from being synchronized with a video,
limit the song to a one-track mp3 or wav files rather than providing access to the session files,
leave the producer tag in the instrumental.

Exclusive licenses typically come with none of the above restrictions and once the beat is “sold” it cannot be leased or licensed to anyone else – hence the exclusivity. The key to understand is that a license does not actually sell or assign the producer’s ownership of the instrumental – it is a granting of certain rights to the recording artist, and only that recording artist, for specific uses. Even though the uses come with few to no restrictions, the producer still retains ownership of his instrumental. Exclusive licenses are typically drafted so that the producer and the recording artist share in 50% of the royalties from the master and publishing.

If 100% of the rights and interest to the instrumental are assigned to the buyer (the recording artist), and the agreement specifically states that the producer’s contribution to the final master is a “work made for hire” - the agreement is a work made for hire rather than an exclusive license. In this case, the recording artist and/or buyer is considered the original author of the instrumental despite the producer creating the instrumental. In a work made for hire agreement (which is typically the type of producer – artist agreement when the artist is represented by a record label), the artist or the label pays significantly more for 100% ownership of the final recorded product. The producer will typically have a small royalty stake (typically 1% – 4%), but not ownership stake, in the final master and share equally with the artist in the publishing.

As an artist or a producer – it is important to understand what uses are allowed under the agreement. Lil Nas X could have faced a significant lawsuit from the producer for breach of contract had they not amended their original agreement. Lawyers (like us!) can also help educate you on what rights you are gaining and/or giving away.

This article is for informational purposes only. If you have any questions, please contact our team at Troglia•Kaplan Attorneys.

Contract Pitfalls for the DIY Music Producer