Everything to Know About Online Beat Licensing


Music Producer, Artist, Songwriter, Entrepreneur

Online beat licensing has been a common practice for music producers for many years. Platforms like BeatStars, Airbit, and Soundee have taken the industry to new heights. ⁣

Technological advancements make it easy for anyone to create and sell beats. However, it's important to remember that beat licensing is a serious business.⁣

This guide will explain the basics of beat licensing and focus on the differences between exclusive and non-exclusive licenses.⁣

So get a snack and some water, and sit back!🥤⁣

Whether you're a producer or an artist, by the end of this guide, you will know all the information you need to know about online beat licensing.⁣

Table of Content

Part 1: Beat Licensing Explained

The concept of beat licensing is easy to understand. A producer makes a beat and uploads it to their beat store. Any artist can buy these beats directly from the store and use them for their own songs.

The producer will provide the artist with a license agreement in exchange for their purchase. A document that grants the artist certain user rights to create and distribute a song.

This license agreement is legal proof that the producer has permitted them to use the beat.

A common misconception is when artists ask producers for free beats. Even when a producer agrees and sends the artist a free beat, the truth is that free beat is useless as there is no legal proof and permission to use it. That's where the license agreement comes in.

Before we go any further, we must let go of the common phrases of "buying beats" and "selling beats." The product we're dealing with here is not the beat itself. It is the license agreement.

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Non-Exclusive Beat Licensing

Non-exclusive licensing, also known as 'leasing,' is the most common form of beat licensing. For anywhere between $20-300, you can buy a non-exclusive license agreement, release a song on iTunes, Spotify, or Apple Music, create a music video for YouTube, and make money!💰

These are also the types of licenses that are directly available from the producer's beat store. In other words, you don't have to inquire about them, and you can instantly buy a license from the online store.

In most cases, a license agreement is auto-generated, including the buyer's name, address, timestamp (Effective Date), user rights, and the information of the producer.

With a non-exclusive license, the producer grants the artist permission to use the beat to create a song of their own and distribute it online. The producer will still retain copyright ownership (more about this later), and the artist has to adhere to the rights granted in the agreement.

The limitations of Non-Exclusive Licenses

Most non-exclusive licenses have a limitation on sales, plays, streams, or views. For example, the license might only allow a maximum number of 50,000 streams on Spotify and/or 100,000 views on YouTube.

A non-exclusive license also has an expiration date, meaning it will only be valid for a fixed period. It could be anywhere between 1-10 years. After the contract period is due, the buyer has to renew the license. In other words, buy a new one.

The license will also need to be renewed once the buyer reaches the maximum amount of streams and/or plays. Even if that's before the contract's expiration date (!)

Since these licenses are non-exclusive, a single beat can be licensed to an unlimited number of different artists. That means several artists could use the same beat for a different song under similar license terms.

Whether this is a problem depends entirely on the current stage of the artist. A beginner artist would be best off with a non-exclusive license. In contrast, a signed artist or artist on the verge of blowing up might be better off with an exclusive license.

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& FREE bonuses from the

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The different types of Non-Exclusive Licenses

Most producers offer different non-exclusive licensing options. In my case, I offer a Basic MP3, Premium WAV, Unlimited, and Unlimited w/Trackout Stems License.

Every option comes with individual user rights. These user rights are often displayed in licensing tables similar to mine below.

My pricing tables

The more expensive the license, the more user rights you're getting. These more expensive licenses also come with better-quality audio files.

In my case, the highest tier, the Unlimited w/Trackout Stems license, is the most popular. That's because you get the best audio quality, tracked-out stem files of the beat, and good user rights.

Artists who believe these rights need revisions for their songs usually go for the highest tier... an Exclusive license.

Exclusive Beat Licensing

When you own the Exclusive Rights to a beat, there are no limitations on user rights, meaning an artist can exploit the song to the fullest.

The contract has no maximum number of streams, plays, sales, downloads, or expiration date.

The song may also be used in numerous different projects. Singles, albums, music videos, etc. Compared to non-exclusive licenses, which are usually limited to use in a single project only.

In the case of buying the exclusive rights to a beat that was previously (non-exclusively) licensed to other artists, the artist that purchased the exclusive rights is typically the last person to purchase it. After a beat has been sold exclusively, the producer can no longer sell or license the beat to others.

That doesn't mean the previous non-exclusive licensees will be affected by this. Every exclusive contract should include a "notice of outstanding clients" section.

This section protects these previous licensees from getting a strike by the exclusive buyer.

"Notice of Outstanding Clients"

These are the main differences between non-exclusive licenses and exclusive licenses. But it goes further than that, and there often needs to be more clarity around the topics of rights and royalties.

As we advance in this guide, we will go more in-depth about Royalties, Publishing, and Copyright.

Two very different ways of selling Exclusive Rights

For many years, producers had different ways of selling exclusive rights. Luckily, contracts are becoming more streamlined and matching the industry standard in recent years.

Still, I want to address two different ways of selling exclusive rights.

1. Selling exclusive rights

2. Selling exclusive ownership

By selling exclusive rights, the producer remains the music's original author and can still collect the writer's share and publishing rights. (again, more about this later)

By selling exclusive ownership, the producer sells the beat, including all interest, authorship, copyright, etc. These deals are also known as 'work-for-hire.' Basically, the artist retains actual ownership over the beat and will–from that point on–be considered the legal author of the beat.

Within the beat licensing industry, selling exclusive ownership is wrong, unethical, and–in most cases–not compliant with Copyright Law.

It's only suitable to come to an agreement where both the artist and producer get credit for their work—Legally, financially, and commercially.

Part 2: Everything you need to know about Royalties, Writers Share and Publishing Rights

Here is the part that most people need help understanding, mainly because there are many different deal structures in the music industry. No worries! 😉 By the end of this guide, you'll know everything you need to know.

Let's break things down step-by-step and solely regarding online beat licensing.

Before we jump into this next section, we must first understand two types of royalties.

1. Mechanical Royalties

2. Performance Royalties

Mechanical Royalties

Mechanical royalties are generated when music is physically or digitally reproduced or distributed. That applies to hard copy sales, digital sales (e.g., iTunes), and streams (e.g., Spotify).

Performance Royalties

Performance royalties are generated when a song is performed publicly. That applies to music played on the radio, performed live or streamed, for example.

Who gets the Mechanical Royalties?

In most cases, the artist is allowed to keep 100% of the mechanical royalties in exchange for the price they pay for the license. Regardless of whether the license is non-exclusive or exclusive.

These days, distribution services like TuneCore, CDBaby, or DistroKid pay these mechanical royalties directly to the artist. That is, if the artist works independently.

When an artist is signed to a label, the label usually collects the mechanical royalties and might choose to pay (a percentage of) it to the artist.

Advances against Mechanical Royalties in Exclusive Agreements

I intentionally said that "in most cases," the artist gets to collect 100% of the mechanical rights because this does not always apply. There's an exception to this, which only applies to exclusive rights.

Some producers (including myself) ask for a tiny percentage of the Mechanical Royalties in their exclusive agreements. That could be anywhere between 1-10%.

That is also known as 'points' or 'producer royalties.'

In this scenario, the price an artist pays for the exclusive rights is considered an "advance against mechanical royalties" that might become due in the future. It will be calculated over the Net Profit of a song. Meaning that all costs to create the song, including the exclusive price, may be deducted first before the producer gets his cut.

Here's an example of how this could play out in a real-life situation.

Let's say a producer sells the exclusive rights to a beat for $1,000 USD as an advance against royalties. His mechanical royalty rate is set to 3%.

The artist paid:

$1,000 for exclusive rights

$500 for studio time

$500 for getting the song mixed and mastered

Total expenses = $2,000

After one year, the song generated $10,000 in Mechanical Royalties!

The Net Profit: $10,000 – $2,000 expenses = $8,000 💰

The Producer's Cut: 3% of $8,000 = $240

As an independent artist, $8,000 is a lot of money to generate on Mechanical Royalties. Still, only $240 has to be paid to the producer.

Why an Advance against Royalties?

It seems pointless; however, there's a reason why some producers (including me) prefer selling exclusive rights with an advance against royalties.

A few years back, I could easily sell exclusive rights for between $2,000 – $10,000. (The Good Ol' Days! 🤠)

These days, it's considered 'normal' to sell exclusive rights for less than $1,000. With all the competition and the beat market becoming more saturated, the prices have dropped, and it has become harder to close 4 or 5-figure exclusive deals.

But what if the song blows up!?

What if a song starts generating millions of dollars, and you sold the exclusive rights to that beat for less than $1,000?

That doesn't really sound like a fair deal, does it?

An advance against royalties can offer the solution. It's insurance for the producer, just in case the song blows up. It's also something the artist only has to worry about as soon as the song starts generating serious revenue. And even still, it's only 3%.🤷🏽‍♂️

🔥 Get 42 Beats

& FREE bonuses from the

"Dark Artist Beat Bundle"

All for the price of one beat.

FREE Bonuses Include:

Mix & Mastering (1 song)

Artist Starter Guide PDF

Record Labels Contact List

Music Contract Templates

Who collects the Performance Royalties?

Performance royalties are collected and paid out by Performing Rights Organisations (PROs), such as ASCAP or BMI in the US or PRS in the UK.

(Every country has its organization, check which one is yours)

These royalties are divided into two parts:

1. Songwriter Royalties (A.k.a. Writer's Share)

2. Publishing Royalties

The PROs collect both of these royalties and divide them into two groups.

For every $1 earned on Performance Royalties:

- $0.50 goes to Songwriter Royalties

- $0.50 goes to Publishing Royalties.

The $0.50 Songwriter Royalties will be paid out to the songwriters directly by the PRO.

The other $0.50 publishing royalties will be paid out to a publishing company or publishing administrator. (more about this later).

What are songwriter royalties?

First, let's break down the Songwriter Royalties.

The songwriter royalties, also known as the 'Writer's share,' will always be paid out to the credited songwriters. That is the part that can not be sold through an exclusive license other than a work-for-hire agreement.

As I said before, this needs to be corrected in the industry of licensing beats online.

In case you're getting confused, a producer is also considered a 'songwriter' in copyright law. 🤓

Songwriter royalties apply to anyone with creative input in a song—producers, songwriters (lyricists), and sometimes even engineers.

Generally, non-exclusive beat licenses are sold with 50% publishing and writer's share. That is usually not negotiable since the music part is the producers' contribution to your song and is considered half of the song. The lyrics are considered the other half.

It doesn't matter if multiple songwriters contributed to the lyrics. In that case, this 50% should be divided between them.

Example Non-Exclusive beat licenses:

50% Producer

25% Writer 1

25% Writer 2

As part of an exclusive rights deal, a different split between all creators could be negotiated. It all depends on the price and flexibility of the producer.

While I generally stick to my 50%, some producers sometimes agree to the following example split.

Example Exclusive Licenses:

30% Producer

35% Writer 1

35% Writer 2

What are Publishing Royalties?

Unlike Songwriter royalties, Publishing can be assigned to outside entities called publishing companies. Most independent artists and producers will likely not have a publishing deal, so they'll have to collect the publishing royalties themselves.

Surprisingly, a lot of money is left on the table here. If you're an independent artist or producer who only signed up with a PRO and not with a Publishing Administrator, half of what you've earned is still waiting for you to collect.

I'm personally using Beatstars Publishing. Also, SongTrust services are excellent, and I'd recommend either to any independent creator.

In terms of licensing beats online–regardless of an exclusive or non-exclusive license–the percentage of publishing rights is generally the equivalent of the writer's share.

50% of the writer's share equals 50% publishing share.

Part 3: The Copyright Situation…Who owns what?

Here is a tricky topic that goes further than I can explain right now. Suppose you really want to know the ins and outs concerning copyright. In that case, I suggest you dive deeper into Copyright Law using our good friend Google or consulting an actual attorney.

Again, I'll explain copyright solely regarding licensing beats online as we advance. We'll dismantle a song to its creators and copyright holders, hopefully making it clear who owns what.

Performing Arts Copyright (PA-Copyright)

Let's say you're an artist, and you searched for beats on YouTube. You find one you like and head over to the producer's website. You buy a license for that beat, write lyrics, create a song, and distribute it through CDBaby, TuneCore, or DistroKid.

That song contains two copyrighted elements:

1. The Music

2. The Lyrics

The producer owns the copyright to the music, and you own the copyright to the lyrics.

Regardless of whether you've bought an Exclusive License or Non-Exclusive license, the producer will always own the copyright to the music. The artist will always own the copyright to the lyrics (unless it's written by someone other than the artist).

That is what we call Performing Arts Copyright (PA-Copyright).

On a side note: Many believe that you have to register the music or the lyrics with the U.S. Copyright Office, yet, in fact, the instant you write something on paper, make a beat in your DAW, or save a demo song to your hard drive, it's copyrighted!

Sure, there are benefits to properly registering with the U.S. Copyright Office, but failing to do so doesn't mean losing ownership of your creation.

Sound Recording Copyright (SR-Copyright)

Back to that song you made, together with the producer, you've created a new song. In legal terms, this is often referred to as the "Master" or "Sound Recording."

Now, this is where things can confuse people because the difference between an Exclusive or Non-Exclusive license plays a huge role here.

As an artist, buying beats from a producer:

- If you have exclusively licensed a beat, you do own the master and sound recording rights.

- If you have non-exclusively licensed a beat, you do not own the master and sound recording rights.

In an exclusive license, the Master rights will be transferred to the client (artist), and it will become their sole property, free from any claims from the Producer.

The only exception is the producer's right to jointly claim the copyright of the so-called 'underlying musical composition.' That is what we referred to earlier as the PA-Copyright. The producer is and always will be the original creator of the music.

With a non-exclusive license, the client does not own the master or sound recording rights to the song. They've been licensed the right to use the beat and to commercially exploit the song based on the terms and conditions of the non-exclusive agreement. Yet again, they do own the PA Copyright of the lyrics.

Instead, what they've created is called a Derivative Work.

What's a Derivative Work?

Regarding beat licensing, a derivative work is a combination of an original copyrighted work (the beat) and someone else's original work (the lyrics).

Derivative works are very common in the music industry, and you probably come across them daily.

Examples are:

- Remixes

- Translations (A Spanish version of an English song)

- Parodies

- Movies based on books (Harry Potter)

These are all so-called 'new versions' created using preexisting copyrighted material.

In terms of beat licensing, a non-exclusive agreement authorizes an artist to create a 'new version' using the producer's copyrighted material.

The only person that can authorize a derivative work is the owner of the underlying composition itself, in this case, the producer.

When someone licenses a beat on a non-exclusive basis, they're specifically given the right to create a Derivative Work.

Beats that contain third-party samples

Pretty straightforward up till now, right? Well, please pay close attention now because this is where things often go wrong…

A common misconception when producers sell beats with samples is thinking they can turn the responsibility of 'clearing the sample' over to the artists who license the beat.

I guess somewhere, sometime, someone made a statement about this which is… Entirely FALSE!

That is make-believe, and it couldn't be more wrong! 🤦🏼‍♂️

Please view the image below for context…

In the image above, two versions are derived from the original sample. (Version AB and Version ABC)

Since both these versions are considered 'New Work' and both contain that original sample–Clearance for Version AB does not account for Version ABC.

Both the Producer and the Artist are required to clear the first sample! Because, in this scenario, a song has three different copyright owners.

Obviously, everything falls and stands with clearing the original sample.

That will get hard as soon as multiple artists license and create their songs with the same beat. After a while, there could be a lot of Versions of ABC deriving from it.

That is precisely why I personally stay away from using samples… 😊

Exclusive or Non-Exclusive, what is best for you?

By now, we've covered all the differences between non-exclusive and exclusive licenses. But, if you're an artist, you might still wonder which option is the best for you.

Besides the difference in price–in every way–an exclusive license is the better option. No doubt! 💯

However, this is optional for everyone. In fact, most artists are better off with a non-exclusive license.

Let's have an honest view of your current situation…

- How many followers and fans do you have?

- How many songs have you released to date?

- What is the number of plays/streams you get on average? (all platforms combined)

- How big is your marketing budget?

- Are you getting financial support from a label or publisher?

Ask yourself; What would be the best option for the artist you are TODAY?

You see, most artists are not ready to buy exclusive rights yet. And there's no shame in that at all.

Suppose you're a young artist working on a mixtape or first album to get your name out there. Why would you spend that much money on exclusive rights if you're still determining if the record will get big?

The wise(r) investment would be to get one of the higher-tier non-exclusive licenses. Preferably, the Unlimited Licenses.

That allows you to spend less, buy more licenses, release more music, and gradually build your fanbase until you're ready to take that next step.

A summary of the differences between Exclusive and Non-Exclusive Licenses

In the image below, you'll find a summary and comparison between Non-Exclusive and Exclusive Beat Licensing. Please note that the Non-Exclusive' Sales' and 'Streams' limit does not apply to the "Unlimited" licenses.

Non-Exclusive vs. Exclusive

Before we go into Part 4….

I know the world of buying and selling beats online can sometimes be confusing. I've noticed this firsthand from working with artists and producers daily.

Heck, I've read dozens of books myself to understand things fully! 😅

Still, I appreciate you for making it this far in the guide, and I sincerely hope you've learned a thing or two… Feel free to refer back to this whenever you struggle with anything related to the topic.

I want to give a special thanks to Robin Wesley. He helped shape this guide into what it is now.

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Part 4: FAQ About Beat Licensing

We continue to update this guide to provide the answers to the most frequently asked questions concerning beat licensing.

I want to license a beat that is already sold by the producer. Can I reach out to the exclusive purchaser so they can sell me a license?

No, that's not an option. A common mistake made by artists (desperately) trying to license an already sold beat is, thinking they can locate the buyer and buy it from them.

Every exclusive contract states that the beat cannot be resold or licensed to a third party in its original form and if it's not overlayed with lyrics. If they would, that would be a breach of the exclusive agreement.

Someone wants to buy a beat I already sold and asks if I can create a similar one. Can I?

In this case, we'll have to define the word 'similar.' Suppose that means re-using parts of the sold beat or replicating melodies you used in that beat, then NO. You're basically 'sampling' a beat that you've already sold. In a way, you're creating a derivative work you're no longer allowed to do.

But if that means using a similar song structure. Or similar instruments, yet different chords and melodies, then YES. It's possible to do that.

I recently bought a non-exclusive license for a beat. Now someone else bought it exclusively. What happens to my song?

Nothing! 🙂 Your license will be in effect for the length of the agreement or until you've reached the maximum number of streams and/or plays. (Check your license agreement)

Your non-exclusive license agreement should include an "Effective Date" (the day you bought the license) and an "Expiration Date" (This could also be a period of time after which your license will expire. E.g., 5 years).

Within the Exclusive contract with the buyer, a so-called "notice of outstanding clients" will protect you from the exclusive buyer striking you with a copyright claim.

My non-exclusive license is reaching its streaming limit, but I can't buy a new license because the beat is already sold exclusively. Do I have to take the song down now?

If your non-exclusive license is reaching its streaming limits and extending the license is not an option, then yes––legally, you will have to take the song down. How unfortunate that might be.

That is the exact reason why the Unlimited Licenses are such a great option, considering they have no streaming cap. Though it's more expensive, it avoids (awkward) situations like these.

Someone released a song with one of my beats but didn't get a license? What's the best course of action?

Unfortunately, often this happens if you're a producer promoting beats online. Luckily, there are different ways to go about this. The first step is to reach out to the artist(s) and notify them about the unauthorized use of the beat.

Then, offer them 2 options.

1. Either buy a license so they can keep the song online

2. Or remove the song entirely from all platforms it's published on

In the best-case scenario, they adhere to your request. But what if they don't?

In that case, you have two options.

1. Leave it be

2. File for a DMCA takedown (click the link for more info)

Suppose the song isn't gaining numbers and could be of better quality (which is usually the case when beats are used unauthorized). In that case, it might be best to leave it be. It's not worth your time and money.

The alternative, filing for a DMCA takedown, will cost you some money. I would only consider this if the song gains serious numbers (1000s of views or stream on any platform).

🔥 Get 42 Beats

& FREE bonuses from the

"Dark Artist Beat Bundle"

All for the price of one beat.

FREE Bonuses Include:

Mix & Mastering (1 song)

Artist Starter Guide PDF

Record Labels Contact List

Music Contract Templates

I created a beat with another producer. How do we split the publishing and songwriters share?

Collaboration splits are very common these days, yet there's no quick answer to this question. It all depends on what terms you're collaborating on.

If you're collaborating with a producer and you upload that beat to your beat store, the most common split would be 50/50. That goes for sales, publishing, and songwriter share.

When the beat is sold or licensed to an artist, they're usually granted 50% of the publishing, and writers share toward the song they make. Exact numbers differ depending on the contract terms the producer offers.

But in this case, the split would be as follows.

Producer 1: 25%

Producer 2: 25%

Artist: 50%


Music Producer, Artist, Songwriter, Entrepreneur

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