Work for Hire vs. Assignment vs. Licence: Three Ways to Transfer Rights in Music and Why the Difference Matter

In Nigeria and in most jurisdictions in the world, copyright in musical works is deemed property that can be transferred by way of assignment, testamentary disposition, or some other operation of law. It is the proprietary nature of these rights that forms the very basis of the music business and indeed the music industry.

Our topic today is centered around the transfer of copyrights in music work under Nigerian law. We will explore three ways in which, in practice, music rights have been passed from one person to another, and what the implication of each method holds for royalties, ownership, and control. 

Music Rights Transfer

When we hear music rights transfer in Nigeria, some automatically think licensing. It has become quite commonplace and almost synonymous with “giving up ownership of rights” in music. However, some of these “licensing” contracts are wrongly termed so. That is why you can have a contract that reads as an assignment but is still termed a licence agreement, and usually to the detriment of creatives who do not read contracts before signing them. But as we will explain, the true legal and royalty implications for each of these arrangements. 

The Scenario

Three producers walk into a session. Each one makes a significant contribution to the same song. One signed a work-for-hire agreement before the session started. One signed an assignment contract for the copyright after the song was done. One signed a licence agreement that expires in two years. 

Now, a year later, the song becomes a hit. Which of them can still collect royalties from it? Can you guess which one?

Three Distinct Legal Arrangements 

The bone of contention is the exclusive rights to reproduce, broadcast, perform, distribute, and adapt the work. These rights are vested in both the composition and the master recording separately. They are legally recognised and protected. And so, what each of these agreements represents is varying degrees of effectively giving up ownership or control of those rights. Understanding these differences might be the difference between access to decades of royalties or none at all. 

Work for Hire: It Was Never Yours to Begin With

When you create a work under a work-for-hire agreement, the law says you do not own the rights to that work. This is not even a case of rights transfer; the law says there is nothing to transfer to begin with. 

The one who commissioned the work, that is, paid for your skills to develop that project, has ownership of  the copyrights from the moment that work was created. Section 28(2) of the Copyright Act 2022 describes this as work created under a contract for services or in the course of employment. Copyright in that work vests in the employer or commissioning body, not in the individual who did the creative work, unless an agreement provides otherwise.

This is true for compositions and recordings created or contributed to by in-house producers under an employment contract, or freelance producers, studio engineers, songwriters, and independent artists who choose this arrangement. The operating word here is hired. Whether to make a beat, write lyrics, or provide vocals, where further rights were never negotiated, and they usually are not, the commissioning party will claim full ownership of the work created.

And there may be no claim to ongoing royalties either. The charge, fee, or payment, by whatever name you choose to call it, is a one-time compensation for the services rendered and brings to an end the entirety of the contractual relationship.

Assignment Contract: You Owned It, But Not Anymore

Legally, to sign an assignment contract is to give away your rights to the subject matter of that contract, and this case is no different. A copyright assignment is a permanent transfer of ownership from one party to another. The one who receives these rights, typically called the assignee, steps into the creator’s shoes and becomes the new owner. They gain the right not only to collect royalties over the work, but also to determine how that work may be exploited in the future. Similar to when a label acquires a catalog, they are now entitled to collect the royalties on that body of work going forward.

However, the Act does allow an assignment to be limited in scope. The contract could cover only the exercise of specific acts, only part of the copyright period, or only a defined territory. Essentially, the assignment does not have to be all-or-nothing.  A songwriter could for example, assign the right to reproduce their work in Nigeria while retaining the right to license it internationally or even negotiate a continuing royalty share from any future exploitation of the work.

Licence Agreement: You Still Own It, But Someone Else Can Use It

To grant a licence is to give permission. Copyright ownership is the exercise of authority exclusively over a creative work, specifically to reproduce, broadcast, perform, distribute, and adapt it. It then follows that for any person other than the copyright owner to exercise any of these rights, they need the authorisation of the one who owns the work.  That authorisation is known as a licence. 

A licence is usually granted for a specified purpose, and a good example is a sync licence, which grants a film production the right to incorporate a song into a visual work. A licence is not a transfer of ownership. However, under the Act there is a distinction between exclusive and non-exclusive licences. While an exclusive licence, which the Act defines as one that authorises the licensee, to the exclusion of all other persons including the copyright owner, to exercise a right that would otherwise belong solely to the owner, must be writing to be valid. A non-exclusive licence carries no such implication, does not have to be written, and may be oral or even inferred from conduct. 

We must emphasize that in a licence agreement, what is granted is permission to use the work. The creator retains ownership and continues to benefit from royalties according to the terms of whatever was agreed. Also, a  non-exclusive licence does not limit the creator’s ability to grant additional licences to other parties simultaneously.

A Few Things To Bear In Mind

The Copyright Act is clear that an assignment or an exclusive licence must be in writing. As such, a verbal agreement is not legally sufficient. 

It is also worth noting that none of these arrangements extinguishes the creator’s moral rights. Moral rights, specifically the right to be attributed as the author of the work and the right to object to any distortion or modification that would harm the creator’s reputation, cannot be transferred during the creator’s lifetime, even under an assignment.

Conclusion

It is our hope that by now you can answer the question posed by our scenario earlier: which of the three producers can still collect royalties from that work? Perhaps you have a definitive answer, or perhaps you have carefully read this piece and realised that the real strength lies in contract negotiation.

The legal and royalty implications for any of these arrangements are immediate, but they become loudest after the buzz of that lump sum dies down. Our aim is not to exalt one arrangement over another, but to inform, to explore what lies beyond the flat fee for a work-for-hire session or the payment for a catalog sale. So you can understand which of these three you are entering, and what exactly you are giving up with a simple stroke of the pen.  

Note: This article is for informational purposes only and does not constitute legal advice.