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.
Work for Hire (Complete Buyout)
There is also another type of deal, which is even worse: the complete music buyout. In the US, work for hire can refer to this type of contract. The composer receives an up front fee and the company keeps all future revenue including the writer’s share of performance royalties. The composer cuts themselves out of any future income at all for their composition. In this case the composer wouldn’t even receive writer’s royalties for usage of the track on television.
Take your time to think over any music work for hire contract you receive. Also be sure to seek legal counsel if possible. While an up front payment may look attractive, within just a short period you may have easily made that and more from a split of license fees sold.
Further Discussion and Information
Some writers continue to get new placements on tracks they wrote 10, 20, even 30 years ago. Check out some of our members’ responses here. You’ll see there are composers still getting new placements for tracks they wrote in 1982! Your Oldest Track With Placements and How Much for a Complete Buyout
There is further guidance from BMI here: https://www.bmi.com/news/entry/Watch_Out_for_Work-for-Hire and also from Your Music Your Future here: https://yourmusicyourfuture.com/faq/. You can check out their section on “The Hazards of a Buyout”. In general Your Music Your Futures is a great resource for composers and can help you to get paid fairly and avoid music work for hire contracts. Last of all, for a more international perspective from the UK, have a look at this page: https://musiciansunion.org.uk/campaigns/composers-against-buyouts/buyouts-for-composers. As you’ll see, outside the USA, many countries make sure the composer is legally entitled to keep at least some of the rights to their music.