There are two main ways that you can make money in a licensing scenario. First, there’s something called the synchronization fee (aka synchronization royalty), which is an upfront fee paid by the client to the music library for the rights to use (sync) the piece of music, and the particular recording of it, in their production. Technically, these are two separate fees, but are typically rolled together into one. The amount can vary greatly, from hundreds of dollars (or in some cases less) to thousands of dollars, and depends a lot on how the music will be used. The fee for a network TV usage would be a lot higher than for a corporate training video.
A music library that’s offering a fair deal to writers will offer them a cut of the sync fee, typically 50%. However, I’ve seen licensing contracts where the split is higher in favor of the library or sometimes non-existent, where the library takes it all, and only offers you performance royalties. I wouldn’t recommend such a deal.
Depending on how your music is used, you can make some money on the back end, from the performance royalties that are collected by a performance rights organization (PRO), either ASCAP, BMI or SESAC. You’ll have to choose one and join it (SESAC is more selective about who can join). A separate PRO, SoundExchange, deals exclusively with digital (online) performances of music, and you can register with it in addition to your PRO. The music library will ask you for your PRO affiliation, and if your music gets licensed for TV or radio, and your PRO is aware of that usage (they have a variety of ways of tracking such things, but not every usage gets noticed), you can collect on your share of whatever royalties are generated. In the U.S., movie performances don’t generate performance royalties, but you can royalties for international movie usage.
The library takes care of registering the music with the PROs, and they'll do that because they're taking what's called the publishers share of the performance royalties. Royalty payments on music are split evenly between the publisher and the writer. In most music licensing contracts, the publisher's share goes to the library, and they usually give you the entire writer's share, or sometimes half the writer's share. In a fair contract, you’ll get 100% of the writer’s share.
In many cases performance royalties will be fairly minimal, unless you’re lucky enough to get music on a network TV show or a movie that’s released in foreign theaters.
It’s important to be careful about the contracts you sign with licensing companies and libraries, and to understand what rights you’re giving up. If you can, have a music attorney review the contract before you sign.
An exclusive matter
You can submit your music to a licensing service or library either exclusively or non-exclusively. There's a fairly big difference between them, and while some libraries or licensing services accept both types, others focus on one or the other.
In a non-exclusive scenario, you retain rights to license the music, so you can submit it to multiple libraries. Non-exclusive music can be less attractive to clients, because they can't be sure they’ll be the only entity using that music. For small usages, such as corporate video background music, exclusivity isn’t typically an issue, but for a TV show or commercial, it could be, because those kind of productions would want to be sure they had exclusive music.
In an exclusive deal, you give the library sole rights to the piece of music, which makes it more valuable to them (since no other libraries will be shopping it), and that can mean that they’ll market it more heavily and charge the clients more for licensing it, and hence you’re likely to profit more from it. Exclusive libraries also tend to be smaller, so your music may have a better chance of having your music chosen. If you’re going to agree to grant exclusive rights to a library, make sure that A) you haven’t given the rights to anyone else, and B) that you can live with the consequences of giving up the rights to your music. In a nutshell, you’re giving up more on an exclusive deal, but it's potentially more lucrative.
Depending on the usage, music libraries typically like pieces of music that are at least a minute long, if not longer. They generally prefer songs that don’t modulate (switch keys), and that end dead, rather than fade out. They also like you to provide alternate mixes, such as instrumental mixes of vocal songs, or no-lead-instrument mixes of instrumental pieces, as well as other varieties (e.g., no drums). Typically, you’re asked to submit AIFF or WAV files, rather than compressed files like MP3.
Keep a copy of the DAW files and mixes for music you submit, even after you’ve turned it in. If a client is interested, there might be a request for an alternate mix or some sort of change that you won’t be able to provide if you can’t access the original files.
Libraries and licensing companies often ask you to fill out detailed descriptions and come up with the words to use as metadata tags for your song submissions to make their client’s searches easier. A little information is fair for them to ask for, but I’ve seen circumstances where the library is taking advantage of the writers, because they can. They’re not only asking them to submit work on spec, but then making them do the paper work for them. It’s just another example of how the deck is stacked against composers in this field.
Don’t expect instant riches from music licensing. It’s a competitive field and just having a piece of your music licensed doesn’t guarantee you’ll make significant money. The idea is to get as much music as you can into the licensing channels, so that even if you’re getting relatively small payments, they add up.
To succeed, it’s not only important write and produce good music, but to become savvy about how the business works, and use that knowledge to your advantage. Good luck!