Issues in a Video Game License Agreement

A lot of folks (not including me) play video games.

Here are some of the particular issues that are involved in a license agreement between a video game development company (“Producer”) and a song rights-holder (“Publisher”) regarding the incorporation of music (“Song”) into a video game:

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  1. This is a License, Not a Sale, Transfer, or Assignment:   The Producer is not buying all rights to the Song from the Publisher.  Rather, the Producer is licensing the song from the Publisher for a fee.  Additionally, a video game license is ordinarily non-exclusive, meaning that the Publisher may also license the Song to others, despite granting a license to Producer for the video game.
  2. Synchronization License:  As with licensing songs for film and television productions, a license of a Song for a video game is a license to synchronize the song with the Producer’s images in one, or several, aspects of the video game, plus the associated rights to use or reference the Song in other contexts, e.g., for promotional use.
  3. Lump sum fee or Royalty: “Traditionally,” the video game industry paid a one-time lump sum to Publishers (i.e., a “buy-out”) for the use of the Song, regardless of how many millions of copies of a video game might be consumed.  This arrangement is, of course, dumb, stupid, and unreasonable.  Reasonable video game synchronization licenses might include an initial license fee along with a royalty provision (perhaps escalating, with a cap).
  4. Descriptions of the Scope of the License:  A video game synchronization license agreement will identify the following: (a) the video game; (b) the Song; (c) the actual, anticipated, prohibited, and/or permissible use(s) of the Song within the video game, by describing, for example, the context, time limitations, and particular qualities of scene(s) to which the Song can be synchronized.  The license agreement may grant or prohibit the Producer’s right to “edit” the Song or otherwise create derivative versions of the Song.
  5. Term:  A video game license may be for a limited period of time (e.g., 5 years) or perpetual (i.e., forever), and/or the term of the agreement may be tied to a particular version or iteration of the video game (e.g., “Version 3 release dated ____”).

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