Understanding MFN in Music Synchronization for Film Producers: Why clearing one song can change your entire film budget

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Music has the power to elevate a film in ways that visuals alone never can. A great song can define a character, anchor an emotional moment, and even become part of a film’s identity. But behind every music moment on screen sits a legal and commercial structure that many producers only fully encounter when something goes wrong.

One of the most common sources of confusion in music licensing is the concept of Most-Favoured Nation (“MFN”). Producers often hear the term during negotiations but are not always told what it really means for their budget, timeline, and legal risk.

In this ARMA Update, we will demystify MFN in a practical way, and more importantly, explain how it fits into the broader reality of music clearance, pricing, and chain of title in film production.

1. One Song, Two Separate Rights

   The first thing every producer needs to understand is this a song is not one right: it is two. Whenever music is used in a film, two independent copyrights must be cleared:

   1. The musical composition (publishing rights) ¹

      This is owned or controlled by the songwriter(s) and their music publisher(s). It covers the melody, the lyrics, and the structure of the song.

   2. The sound recording (master rights)

      This is owned or controlled by the record label or the party that financed and owns the recording. ² It covers the specific recorded performance intended for use.

   These two rights exist independently and cannot replace one another. Permission granted by the songwriter or publisher does not extend to the use of the recording, and approval from the record label does not authorize the use of the song itself. From a production perspective, this legal separation means that every use of music in a film necessarily involves two distinct approvals and two separate licenses.

2. How Music Fees Are Actually Built

   Producers often think in terms of “the price of the song.” In reality, there is no single price. Licensing music for a film involves negotiating two separate fees:

   1. a publishing synchronization fee (paid to songwriters and publishers), ³ and
   2. a master use fee (paid to the label or recording owner). ⁴

   These fees are negotiated separately, but they usually reflect the same scope of use, for example:

   1. worldwide or local territory;
   2. cinema, streaming, TV, or all media;
   3. limited term or perpetual; and
   4. exclusive or non-exclusive.

   Taken together, these two fees form what is commonly referred to as the “total sync fee.” But it is important to remember that behind that total are two parallel negotiations, often with multiple parties on each side

3. Where MFN Comes In

   This is where MFN enters the picture. In simple terms, MFN means that no rights holder in the same category should receive a better deal than any other. In music licensing, MFN most commonly applies:

   1. among publishers on the composition side,
   2. among labels or master owners on the recording side, and
   3. sometimes across both sides if negotiated that way.

   As a result, if one publisher receives a higher fee, MFN may require that all other publishers receive the same rate. The same principle applies among master owners.

   The original purpose of MFN is fairness. It is designed to prevent a producer from favouring one co-writer or one record label while paying less to other parties who legally own a share of the same song.

4. Why MFN Matters to Producers

   While MFN sounds reasonable in theory, it has very real commercial consequences for film productions.

   1. One deal can affect all deals – If one publisher or label negotiates a higher fee (even late in the process) MFN can require that higher price be extended to everyone else on that same side. As a result, one holdout can significantly increase the overall music budget.
   2. Small owners can have big leverage – A rights holder with only a 5% or 10% share of a song may still demand a higher rate, knowing that MFN provisions could force higher payments to every other owner.
   3. Publishing and master fees often track each other – Although there is no legal rule requiring publishing and master fees to be equal, in practice they are often aligned for commercial and MFN reasons. Producers therefore feel the impact of MFN on both sides.

5. Ownership Percentages vs Pricing

   Another common misunderstanding is how ownership affects fees. Ownership percentages determine how the money is divided, not how much the total is. For example, if a song costs USD 50,000 on the publishing side, a 50% owner gets USD 25,000 and a 10% owner gets USD 5,000. But the 10% owner does not have to accept a “10% price.” Under MFN, they are entitled to the same rate per percentage point as everyone else. This is why clearance can be unpredictable if ownership is fragmented or unclear.

6. MFN and Chain of Title

   MFN governs pricing, not ownership. A producer may have perfect MFN-compliant pricing and still have a legally broken license if the wrong party signed or if ownership was misunderstood. For this reason, chain of title is just as critical as price.

   In the music context, this requires clear confirmation of who actually owns the publishing shares, who owns or controls the master recording, whether any party is acting only as an administrator or sub-publisher, and whether every rights holder has properly authorized the license.

   Without a clean chain of title, even a fully paid and MFN-compliant license may be challenged at a later stage, placing distribution, financing, and international sales at risk.

7. Protecting Your Film

   When clearing music, producers should ensure that both publishing and master rights are properly licensed, that MFN terms are clearly defined and, where appropriate, mirrored across relevant agreements, and that ownership and authority are verified in writing. Music licenses should also form an integral part of the film’s overall chain-of-title package.

   Distributors, platforms, and investors rely on this documentation to confirm that the film can be legally exploited on a worldwide basis.

   Conclusion

   MFN is not designed to make life harder for producers. It exists to keep music licensing fair and consistent. But without a clear understanding of how dual rights, ownership, and MFN interact, producers can face unexpected costs and legal exposure.

   A solid grasp of these mechanics from the outset allows budgets to be set more accurately, negotiations to be conducted with greater confidence, and films to be delivered not only with creative integrity, but also with a clean and defensible legal foundation.

   1. Article 9 of Law No. 28 of 2014 on Copyrights (“Copyrights Law”). ↩
   2. Article 20 of the Copyrights Law. ↩
   3. Article 9 paragraph (2) of the Copyright Law. ↩
   4. Article 24 paragraph (2) of the Copyright Law. ↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

In this article

1. General Overview
2. Maximum Limit of Economic Benefits
3. Repayment Capacity Analysis
4. Miscellaneous

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