Buyout deals, sometimes known as a composer work for hire agreement or contract, involve an up front payment to the composer, for which the company owns 100% of future license fee income as well as the usual 50% of performance (PRO) royalties. The writer would retain their 50% “writer’s share” of performance royalties, but not in all cases as we’ll see below.
Generally the up front payments that we have seen range from $100 to $1,000 per track. Even the top end of this could be considered very low. As an example, imagine the company sells 50 licenses over the next 2 years for this track, with each license costing $50. (Even these numbers are conservative). The company would make 50 x $50 = $2,500 in license revenue, and the composer would get $0, since they signed away their rights to license income in the work for hire contract. Now imagine that goes on for another 30 years… And imagine that all the licenses are for corporate training videos with no performance royalties. A truly terrible situation for the composer.