Licenses normally generate income for both the buyer and seller of rights – for the buyer by reason of the commercial use it makes of the property, for the seller by reason of the fee received for the use. Licenses also generate cost for both parties – on the buyers side in the form of royalty payments and for the seller the cost of administering the transaction.
Blanket Licensing / Title-by-Title Licensing
There are two principal licensing techniques used by collective administration organizations:
- Title-by-title Licensing
- Blanket Licensing
Where licenses are issued on a title-by-title basis to a licensee there is a direct link between the work, the fee, the use, and the earnings generated for the work by the use licensed. It is the most accurate and precise method of licensing and the one most in line with the objectives of the copyright legislation which is to compensate authors individually in a direct proportion to the actual use of their works. This technique is used for licensing reproduction rights in musical works for sound recordings (mechanical licensing), film and television programs and advertising (synchronization rights licensing) and literary works for performance in theatres (“grand” rights), among others.
A blanket license is one where the entire repertoire of works managed by a collective administration organization is made available for a particular use or uses to a licensee for a single fee. The license covers or “blankets” the repertoire. The fee can be tied to the actual use made of the repertoire or to other factors (such as gross revenues of the licensee) which have only an indirect link to use, or none at all. In either case, the identity of the specific works used plays no role in the licensing arrangement. This type of license is universally used for licensing performing rights to the broadcast industry.