The problem with beat leasing contracts

The music business is notorious for poorly written leasing contracts that are also not really understood (or read?) by either buyer or seller. Whether you’ve created an instrumental that you want to earn from, or you can’t yet afford to buy a beat outright, when you get involved with beat leasing there are several important things to bear in mind.

1. When will the time run out?

When you buy a beat outright, copyright gets transferred to you forever. When you’re leasing, no matter if it’s an exclusive contract or not, the beat is only yours for a specific period or for an agreed number of streams or downloads (or a mixture of the two: often, one download is considered equivalent to a number of streams). After you’ve reached your time or stream limit, the beat is not yours to use anymore, period. The length of time for which the beat is leased is known as the term.

Creators must be aware of the length of the term. You don’t want to still be streaming or selling works containing the beat you’ve leased after the agreement has timed out. This contravenes the beatmaker’s copyright.

If you’re the one who produced the beat, staying on top of the term length means you can be ready to lease your beat again as soon as possible – whether to a new creator or as an extension for the current leaser – or indeed take action against a creator who has overrun their lease period. None of this means that terms should necessarily be short. Artists need to know they have time to create and exploit the tune that features your beat, so they can recoup the money they spent leasing it in the first place.

2. What are you allowed to do to the beat?

Alongside the term of the lease is the scope, which details how the beats may and may not be used. Many leases stipulate that the beat must not be used purely as an instrumental. Significant additions – most often vocals – must be added. Another common requirement is that only one track be made with the beat; this generally includes remixed versions as well as separate standalone tracks

You may not only be limited in scope, but also regarding where you can release your tune. There may be a territory clause in your lease agreement. In virtually all cases, it’s crucial that you have the right to worldwide use, as the internet respects few geographical boundaries!

3. What about publishing?

Just because your agreement may not mention publishing, it doesn’t mean that you won’t have to pay royalties to the beat producer, and they’re likely to be at least half of a tune’s royalties.

It’s important to know the difference between the two kinds of copyright. The publishing rights (aka the copyright for the musical work) includes the lyrics and melody. Separate from publishing are the master rights. These are for each individual version of a piece of work. You can have a classic song whose tune and lyrics are credited to one composer – that’s one single instance of copyright – but that has multiple recorded versions and hence multiple sound recording rights.

Each new artist recording of a song means the artist has to pay mechanical royalties to the original creator of the work that their version contains. Leasing beats isn’t much different: Generally, whoever made the beat used in your tune is due mechanical royalties. Sometimes this is not explicit in the lease agreement, but make no mistake: You’ll likely be paying at least half of the tune’s royalties to the beatmaker.

It’s wise to get ahead of these potential issues, either by negotiating a royalty split between you and the beatmaker, in the same way record companies do, or by creating your own bespoke contract, whereby the beatmaker may waive royalty payments up to a specified maximum number of exploitations or if you’re self-releasing (i.e. if you get a record deal then royalties kick in).

The key thing to remember is to read the contract carefully and make agreements about all issues, from the beginning. You don’t want your track to blow up, only to be hit with unexpected royalty demands thanks to a sneakily-worded lease agreement.

4. Who do you credit?

All kinds of beatmakers want to receive credit for their work wherever possible. It can be especially important for new talents to get their name out there. Your lease agreement will detail in what circumstances the credit should appear and how exactly you should word it. There are often several stipulations as to where credits must appear, including on album tracklistings, in metadata, and in marketing materials.

If you’re the artist, try to make sure that there’s a clause in the contract to allow you to correct any mistakes you make when crediting the beatmaker, otherwise you may face legal action for even a minor slip-up.

5. What exactly is being leased?

Unless it’s a very low-price deal, artists will expect the stems of the instrumental (individual tracks for each instrument). It’s tough to mix a decent track without stems, unless perhaps you’re only looking to add vocals and make no other changes. Instrumentals may be priced with and without tracked-out content (i.e. stems). Make sure you get what you want.

In terms of the beat that is supplied, artists expect a certain level of sound quality. Only those super low-price deals will be for MP3 beats. The usual (minimum) standard is a WAV file that does not come pre-mastered.

6. Who else has what rights to the product?

The contract should be clear as to whether you’re paying for exclusive or non-exclusive rights to use the instrumental. If it’s the latter, you may end up hearing multiple other tracks using exactly the same beat as you have the license for, and there’s nothing you can do about it.

Even if you think you’ve got exclusivity, the license may still allow for the use of the beat by previous artists who have non-exclusive agreements. And there’s also the possibility of unscrupulous producers lying about their having ownership of the beat at all!

Try to avoid these pitfalls by asking the producer if, and exactly under what circumstances, they have allowed the beat to be used in the past. Search for the beatmaker’s credentials online. Shazam the beat. And, crucially, read the contract in detail, multiple times. If you’re up on the law, you’ll know to add in extra conditions to the license agreement that act as a warranty in case of something going wrong.