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Industry Bright Spot: Deals for Licensing Ring Tones For Use in Cell Phones
In an industry plagued by shrinking CD sales, the rapid growth in the consumer market for ring tones has been a music business bright spot. In fact, a number of companies have entered the market to provide musical compositions for use by consumers as ring tones for cell phones. The contracts for these companies to license songs from copyright owners vary, but many of the following areas will be addressed:
Term. The term of the agreement for a company to license music from a publisher usually extends for a period of from 1 to 3 years. Occasionally there may be an automatic extension of the license, unless the music publisher gives notice prior to the expiration of the term or a clause in the contract requires good-faith negotiation once the term is over. But in most cases, the licensing term will end as of a set date unless the parties mutually agree to an extension.
Territory. Most ring tone companies will try to secure a worldwide license so that there are no territorial restrictions as to where they can provide ring tones to cell phone users. The majority of U.S. music publishers, however, limit the territory to either the United States or the United States and Canada. Many companies also use the services of the Harry Fox Agency in the U.S. and the Canadian Musical Reproduction Rights Agency. In cases where the territory is limited, the ring tone company will have to make arrangements in other countries with the representative of the publisher in those territories if it wants to do business outside the original licensed territory.
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