Dear Upcoming Artist: What Does Blanket License Mean?

What do you understand about the term “Blanket License”? Have you come across this term before?

It is relatively rife in the music business and it's one you’ll come across as your career progresses. As always, such knowledge helps you in holding the right conversations, asking the right questions etc.

So, what is a Blanket License?

“A blanket license grants a business or entity access to a rightholder’s catalog”. This is a type of permission accorded to entities or establishments who use music in their activities, ranging from restaurants, gym, clubs, TV/Radio etc. More often than not, this license is issued by a Performing Right Organization and it could encompass the entire or limited number of songs in its custody . Here, a publisher or PRO strikes blanket license deals that open their entire catalog or a limited set of songs to a business for an agreed sum.

Performance Rights Organization…?

Yeah. To have a vivid understanding of how this works, you need to also understand performance rights (& neighboring rights) and how it works. Performance Right is the right given to a business to play a songwriter's work (the composition) publicly.

PS: Neighbouring right is same - but for the performers (the sound recording or masters). More on this soonest.

The songwriter will join a Performing Rights Organization that will administer his/her catalog. Songwriters can do this directly or through a publisher. Anytime the songwriter’s music is played live, on radio/TV, at a venue, used in a commercial, the songwriter is owed a performance royalty. PROs are tasked with issuing blanket licenses to entities in exchange of payment that is then split between the songwriter and publisher - where applicable.

PS: This includes the artist as a songwriter. So, if you have writing credits in your own songs, you’ll need to belong to a PRO.

You can consult your entertainment lawyer for more info and steps on this.

What right does a Blanket License Give?

[Public] Performance Right. Blanket license is the deal you seal with PROs to be able to play music in a public place. For entities like restaurants, clubs, gyms, TV/radio stations, the place of music in their dealings should be recognized and duly compensated, but it's often unnoticed. These entities use music (an intellectual property) to create ambiance, attract and retain customers. That, in a way, is marketing.

Ideally, they should seek a blanket license before exploiting the music in that regard. PROs will collect licensing fees from these entities and then split it between the rightholders of the record. It’s not right to play music at a public place - in a way that seems commercial - without getting permission for the songs you play. Buying and streaming music only gives us the right to consume privately or non-commercially. Anything otherwise is relatively illegal.

How Many Songs Do a Blanket License Cover?

Blanket license does not involve an individual license for one song or artist. It gives your business permission to hundreds, thousands and millions of tracks from a particular PRO or publisher. Blanket License does not involve individual permission, as you can’t go from one rightholder to the other. You can either seek a blanket license from different PROs for use of music in their custody. When you get a blanket license from a PRO, it means you’re getting ALL the songs in their custody - in some cases, it's a limited number of songs but never just one song.

Who Grants Blanket License?

The entity who grants a blanket license is called Performance Rights Organization (PRO). They’re the intermediary between rightholders and the music users - restaurants, lounges, gym, clubs etc.

Examples of PROs in this context

There are different collecting bodies in the music industry depending on which country. They grant rights to use music owned by a songwriter or publisher they represent.

• ASCAP, BMI and SESAC in the United States

• SOCAN in Canada

• PRS in the United Kingdom

• APRA and PPCA in Australia

• ACEMLA in Latin América

• SGAE in Spain

• MCSN and COSON in Nigeria

• SAMRO in South Africa

• GHAMRO in Ghana

PS: Some of the above can be called Collective Management Organizations (CMO), as they’re about other rights such - beyond just performance rights. For instance, BMI is known for just Performance rights but MCSN, COSON are known for other rights - not just performance rights.

Are There Possible Exemptions?

Small businesses are relatively exempt from this.

What If My Song Choices Involve Multiple Creators signed to Different PROs

You can pay your local collecting body; they have an agreement with another collecting body and will transfer any applicable royalties to the rightholders. Also, please consult your publisher or entertainment lawyer.

How Does Payment for Blanket License Work?

It’s mostly paid on a yearly basis. The payment also varies, depending on the country of the business and other factors. For venues, the price would depend on the size of the venue and typical audience size. The cost to use Madison Square for an NBA game in the US is definitely not proportional to using a smaller venue.

Are Podcasts Exempted?

Of course not. Payment depends on where you’re broadcasting from and where you intend broadcasting to. In cases where licenses to some country are beyond your price range, you can restrict access from listeners in that region. Podcasters ought to get a license before syncing music to their program. However, it's just better to use music of artists that you have some relationship with and save yourself the hassle.

How are Royalties Split?

PROs track execution of the songs through a mix of digital track or direct reporting. Royalty will be split according to the songs played. Fees are paid under a blanket license based on the ways in which the licensee uses the music. For instance, a DSP would have different fees from a bar owner.

PS: While a blanket license gives a business the right to a PRO’s catalog, the business cannot play every record. In some cases, the business will submit a compilation of songs it’ll be playing periodically. This way, its obvious which rightholders will have a share of royalty.

Term of a Blanket License

It could be based on what both parties agree but it's usually one year and the license could be revoked if a certain term elapses and no renewal is made. When a blanket license is issued, the recipient must comply with certain tracking and reporting guidelines set out by the royalty collection group. The purchaser may be required to turn in playlists for a certain period of time, or to report the setlists of songs played in their venue.  

Though Blanket license has differing structures, its terms are based on certain criteria like:

• Media Type: What the music will be used for (ie network, TV, in-store radio, digital advertising etc.)

• Term: The time the licensee will have the benefit of the blanket license (eg 1 year?)

• Territory: Where the licensee can use the rights (eg USA/Nigeria?)

• Music Quantity: The amount of tracks the licensee will have access to (eg 3000 tracks?)

• Fee: The amount the licensee pays for the rights