As Podcast Industry Grows, Licensing Music Can Get Complicated -- and Pricey

ISSUE 21 2019 - DO NOT REUSE
Courtesy Photos
Clockwise from top left: Cover art for Stay Free: The Story of The Clash, Three Sides of the Coin: A Kiss Talk Show, Song Exploder and Ice T: Final Level Podcast with Mick Benzo

Using unlicensed music? It may be time to pay the piper, podcaster.

A few years ago, when Ice-T was making his Final Level podcast for the independent company Loud Speakers Network, he decided to open it with his 1986 track "6 'N the Mornin'." "It's my song, don't worry about it," Chris Morrow, the network's co-founder and CEO, remembers the rapper telling him. But Morrow did worry: Warner Music owned the master recording, so Final Level couldn't use it.

"It's not worth the risk," says Morrow. "Five or 10 episodes from now, they [could] pull it down and wreck your momentum."

In the past few years, podcasting has grown from a cottage industry into big business, with 93 million listeners and $479 million in yearly advertising revenue in the United States, according to PricewaterhouseCoopers. Producers have become more sophisticated about licensing music — and more willing to pay for it. But clearing rights, for both recordings and the underlying compositions, can be complicated and expensive.

In most cases, using music in a podcast is more like obtaining a synch license for video than making individual songs available online. Producers need permission from the owners of the recording and the owners of the underlying composition — which is especially complicated if a song contains elements of another composition, as in a sample. "If a song incorporates a sample of another song, then the number of rights holders basically doubles," says Hrishikesh Hirway, creator and host of 5-year-old podcast Song Exploder. "We might not know, necessarily, how to get in touch with those people, or maybe you're dealing with an estate. That can get really tricky. Sometimes the burden of clearing a song proves to be too much."

Song Exploder, which dissects songs from acts such as U2, Metallica and Sleater-Kinney, had a "laissez-faire" attitude toward licensing music early on, says Hirway. Today he works with a freelance music-clearance agent to license rights from labels, publishers, creators and estates. "People are paying attention to podcasts in a way that's completely different than it was five years ago," he says, "and as a result, business interests just go along with that."

In most cases, the law is on the side of rights holders. "The bottom line," says Sony/ATV Music Publishing executive vp business and legal affairs Peter Brodsky, "is that these are licensable events, not unlike clearing a sample, in which rights holders deserve to be paid."

For about a year, music-business sources say, rights holders have been monitoring podcasts more aggressively for unlicensed content. "We realized we were undervaluing the podcast market," says one source, "and started proactively approaching people who had been using music without proper licenses."

At some point in the future, that money could add up. As a potential comparison, global film/TV synch licensing revenue from publishing and master recording rights accounts for between $800 million and $1 billion a year, according to Billboard's estimates. It's unlikely podcasting will get that big — but it's possible that music could play a larger role in it.

For the Spotify podcast Stay Free: The Story of The Clash, the streaming company worked with the band's management and rights holders to clear rights to several songs per episode. "It's like the best soundtrack you could possibly wish for. We had an embarrassment of riches, really," says Sam Bungey, who co-produced the eight-part series. "Music is so important for podcasts. It changes the experience so vastly." Neither Bungey nor Spotify would comment on how much the Clash songs cost to license, but an annual track license generally costs between $500 and $2,000 for the master recording, plus the same amount for publishing, sources say, and must be renewed for a podcast to remain online.

Podcasters who use music say their business is evolving from an anything-goes atmosphere reminiscent of early hip-hop sampling or online radio into an industry that depends on licensing — one, some say, in which only big companies will be able to afford the resulting fees. Many top podcasts, like NPR's Serial, get around the licensing issues by commissioning new theme music from artists like Canadian composer Nick Thorburn -- but that's almost impossible for music-centered podcasts. "The Apples, Spotifys and Pandoras are going to be able to deal with that," says Morrow. "We don't have the infrastructure and the money to go through that process. It's going to make it difficult for some of the smaller, independent players left in the space."

When music writer Steven Hyden hosted a music-news podcast called "Break Stuff" for the Ringer, the company's fair-use attorneys said he could use bits of tracks depending on context. It's OK if he comments on a track journalistically or critically, they told him, but not using a copyrighted song as an introductory theme. "It's a really fuzzy line," he says. Although he sympathizes with creators who don't want their music in, say, a white-supremacist talk show, he adds: "It's a detriment to a music-oriented podcast to not have the actual music in the podcast."

Joy Butler, an attorney, intellectual-property expert and author of 2017's "The Permission Seeker's Guide Through the Legal Jungle," says podcasters can use music as part of fair-use laws depending on several key factors. If a podcast records in a public place, and picks up incidental music that happens to be playing in the background, that's probably kosher, as is playing Katy Perry's "Dark Horse" in a news story on the recent jury decision that she infringed another songwriter's work. But there is no length standard. "It's a complete fiction that there's a fixed amount you can use and still be in fair-use safe harbor," she says. "It's not 10 seconds of music, it's not 30 seconds of a film. I will say, the less you use, the closer you will be to qualifying."

It's also possible that the complexity of licensing music for podcasts could hurt the music business in the long run. Every hour a consumer spends listening to a serialized story could be one less he or she spends hearing music on a streaming service.

At least one effort to simplify licensing is on the horizon: SoundExchange, which collects digital-performance royalties for recordings and distributes them to artists and labels, recently announced that it will work with labels and publishers to set up a "one-stop music-licensing" system for podcasts in 2020. The idea isn't to make licensing less expensive — just less intimidating. "I liken it to how people are used to purchasing stock music, or a stock photo," says Sam Harper, a SoundExchange spokesman. "It's very transactional — you click and you have the rights."

This article originally appeared in the Sept. 14 issue of Billboard.


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