A couple of young performers I know—a singer and and a rapper—recently exposed me to the concept of licensing music tracks from a producer. I’m not talking about royalty-free music or beats, for which you pay a flat fee. No, these fully-realized tracks are governed by narrow limitations where the producer has complete control and the artist almost none. I want to talk about how these are usually a terrible idea for recording artists.

When you buy a royalty-free license, the amount you pay up front is the end of your interaction with whoever produced the music. You can then manipulate and use the track in another work (which you own). Or you can use the track by itself as background music for a video or film, if you purchased a license permitting that. You owe no further obligation to the licensor.

But some producers opt for a different approach, which benefits the producer but, in the long run, not the artist. These limited licenses specify variations along the following lines:

• You can distribute the song to one or maybe a couple of platforms, like Spotify, for up to 500,000 streams.
• You can sell up to 10,000 physical copies or downloads.
• You can use the song in one music video for up to 500,000 non-monetized video streams. (Note this is non-monetized, so you or someone else cannot make money when the video is played. But the producer may be able to monetize it for him- or herself.)
• You can broadcast the song on up to two radio stations.
• The license expires after five years and needs to be renewed thereafter.

The Producer Owns the Music

The producer retains ownership of the music, even if you conceived the musical part. That means you can copyright the lyrics and vocal part, but not the underlying musical composition. That reduces your publishing rights to 50% of the song, so you must share all performance and mechanical royalties. Neither do you own the master recording, or even share ownership. It belongs to the producer. None of this would be unusual if you were working with a label that intended to puts its muscle behind promoting the song. But you don’t even get that benefit here. Worst of all, from a creative perspective, the music can be licensed by anyone else, so the music in your song might appear in another artist’s song.

I understand the appeal for young artists, who don’t feel they have the skills or resources to put together a musical track. For a relatively modest fee—maybe $100—you get a release-ready track for your song. But the contract reveals how this is really a bargain with the devil. Your revenue and ability to market the song are severely restricted. An indie label will be reluctant to get involved with the song, further limiting its chances for success. The producer retains complete power over the music and its future usage, and must be involved in negotiating any synchronization fees for video, film, and TV. This further complicates the situation and reduces opportunities for revenue.

Alternatives to Limited Licensing

But there are better alternatives. Learn how to build tracks out of royalty-free samples. (There are dozens of websites offering affordable tracks, like Pond5, or samples, like Big Fish Audio.) Find a producer/writer who will work with you for a more equitable share of potential future revenue (like how actors sometimes do this for a lower fee but a percentage of box office).

If you decide to go with one of these limited licenses, know what you’re getting into and what you’re giving away. It can be a great way to produce a demo. And a major label has the resources to buy the music outright from the producer if it wants to. Just go into the license with your eyes open.