Music Licensing: The Breakdown

When a song (in any recorded form) is licensed for TV, film, games, ringtones. Even a small 10 second usage in a major TV show will result in a lot more money than you can make just selling the record.

There are two rights ("sides") that need to be licensed:

M

aster-use license

The right to use the recording.

Synchronization Rights

The right to use the song (in any recorded form).
If you are the song writer and self-published (which you are by default) then these licenses may be combined into a single contract ("All-in"). These rights will be licensed for an agreed upon sum and for an agreed upon duration.

You also get money through your RoyaltyOrganizations when the composition/recording is played. Make sure you have registered with a PRO, that you have registered the song in question and that they have your current address. The TV/film production company will send you cue sheets, which they will also submit to the PROs. This is eventually used to calculate your earnings.

Direct Licensing

Some TV/film broadcasters seek to directly license your music for a one-time purchase price, bypassing the PRO. This could result in much less money in the long run, depending on how often its likely to get repeat broadcasts.

Sub-licensing

When a record is re-released on another label. This includes compilations, mix CDs, re-presses (of old out of print recordings), pressing in a different market (US vs Japanese vs European version). In the initial contract in independent music it is commonly stated that sublicensing will be split 50/50 after label costs. This means that the label might spend money to convince someone else to license something, and whatever money is generated will then be split 50/50.