Will a Glut of Hungry Musicians Bring Down the Cost of Licensing Music?

Rolling Stone Story Gives Numbers and Hints at Possible Changes Ahead

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Sure, this story has now been written several dozen times, but Rolling Stone has a think piece up called "Rock's New Economy: Making Money When CDs Don't Sell" that dishes out some music licensing numbers we've been wondering about.
  • According to RS's sources, They Might Be Giants are under a $1 million contract to produce all those great spots we love. Interestingly, SFS has heard from its own source that part of this (or these) contracts stipulate that the band is not to be credited publicly by Dunkin Donuts or its agency, Hill Holiday.

  • OK GO may have granted as many as 200 song licenses in their career. Hopefully they've run out of songs and we don't need to hear any more.

  • Although The Shins have licensed songs to McDonald's and Microsoft, they reportedly turn down "90%" of the offers that come their way.

  • According to RS, up-and-coming acts can make as little as $2,500, while more established acts can command up to $250,000 and more. This bottom estimate is lower than anything we've ever heard, on or off the record.
What's also interesting are the new market pressures involved in the past years' music-licensing boom. According to this story, the large supply of bands willing to license music has (naturally) brought down the fees they're able to command:
TV and film licensing fees have begun to come down as music supervisors use hungry unsigned bands from sources like MySpace. Insiders say $2,000 to $2,500 is a common fee for baby bands. Even the soundtrack to Juno offered fees in that range. (Contributors saw a payday only because the album has sold so well.) "Over the years, everyone has gotten smarter," says Lyle Hysen, who runs Bank Robber Music, which represents artists and labels for film and TV licensing, recently matching artists like Tortoise and the Come Ons with ads for Vaseline and Hardee's. "Music supervisors know that if you turn down $10,000 for a car commercial, some other band is going to take it."
As licensing becomes more and more popular, could powerful marketers like Apple eventually bring down prices for licensed songs across the board? SFS got C's in his college economics classes, but a (nearly) unlimited supply of music and a limited supply of marketers seems to say yes, which may be a cold shower for anyone thinking that licensing might be the record industry's Viagra.

[Via Rolling Stone]