Lily & The Limited License
Lily is selling her EP through Tunecore which includes a rousing rendition of Prince’s “1999.” She plans to sell only 200 downloads, so she opts for the Limited License. She pays the $15.00 licensing fee and then pre-pays her royalty fee which comes out to $18.20 (9.1 cents x 200 downloads) for a total of $33.20. This license covers her release for up to 200 downloads.
TWO MONTHS LATER…
Lily gets an email notifying her that she just sold her 201st download. Yay! But she has also exceeded her download limit under her current license. No problem! Lily could re-license her cover for an additional licensing fee of $7.50 plus another pre-paid royalty fee—but she decides she’d rather just convert to a Standard License since she’s doing so well. That way she never has to worry about her license expiring again.
So she pays the $49.00 conversion fee and BAM! She has a license that will cover her forever. Her credit card will be charged every few months for royalties based only on downloads she sells (plus a processing fee of 7.9 cents per unit—see Simon’s story here). If she doesn’t sell anything, she won’t be charged. But she does sell more downloads. And now, Lily is famous.