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This post is by Sara Al Hamad, a solicitor specialising in music rights usage across film and interactive entertainment at UK law firm Russells.
Quick summary:
- Contractual Mismatch: US-style “buy-outs” often fail in Europe because songwriters exclusively assign digital rights to local societies (CMOs) like PRS.
- Licensing Gaps: A standard sync license covers music placement but frequently misses the “making available” rights required for global digital distribution
- Platform Liability: Outside the US, platforms like Steam are legally liable for licensing the music within games, regardless of where the company is based.
- Industry Impact: Ongoing disputes may lead developers to avoid society-affiliated composers to bypass these complex, non-US licensing requirements.
The lawsuit brought by PRS for Music against Valve Corporation over the operation of Steam will turn on the specifics of copyright law. But the dispute also exposes a much broader misunderstanding within the games industry: the belief that music is simply another form of IP that can be dealt with through a sweeping assignment-of-rights clause or a licence with a wide grant of rights.
In many cases the relevant contracts are drafted by US lawyers, reflecting the fact that much of the global games industry is headquartered in the US. The difficulty is that the legal assumptions underpinning those contracts often reflect the US copyright norms, which operate very differently from the collective licensing frameworks found across much of Europe and the rest of the world.
The result is a set of recurring mistakes that continue to surface whenever games are distributed globally. Three of the most common pitfalls are:
- Assuming that all exploitation of music (whether it’s existing music or new music specifically commissioned for the game) can be covered in a single agreement
- Treating US rights structures as global norms
- Overlooking platform liability
Sync Is Only the Beginning
Most games publishers are familiar with sync licences and commissioning agreements. When music is incorporated into a game – whether it’s existing or commissioned music – that use is typically cleared with the rights owner: which on the music publishing side might be the writer directly or their publisher (note that master rights also need to be considered but for the purposes of this article we will focus only on the publishing side).
Once music has been synchronised into a game and the game enters distribution, however, the rights picture becomes more complex. What happens next depends primarily on two factors:
- the media through which the game is exploited (CD/DVDs, downloads, streaming); and
- the territory in which that exploitation occurs.
(We’re focus on downloads and streaming here, as these are the likely forms of exploitation at issue in the PRS dispute.)
For many years, a buy-out culture became deeply embedded within most parts of the games industry. The goal was simple: obtain broad rights upfront to ensure all future uses were covered. For physical distribution, this approach was relatively uncontested. Online distribution, however, is another matter entirely.
Downloads and streams of a game (including previews available on platforms like Steam) can engage both the reproduction (mechanical) right and the communication to the public right (the latter often referred to in the US as performing rights) in the underlying musical works.
Royalties arising from the exploitation of those rights are determined according to the rules of the country in which the download or stream (i.e. the exploitation) occurs. In practice, that means the governing rules may be those of the UK, Germany, France, or any other territory where the service is accessible, rather than those of the US where the platform is headquartered.
“The case between PRS for Music and Valve Corporation is unlikely to be the last of its kind” Sara AL Hamad
The Territorial Trap
For many US-based companies, confusion stems from the way music rights are structured in the American market.
In the US, mechanical licensing and public performance licensing operate under a distinct framework. For permanent downloads, there is generally no public performance involved – only reproduction and distribution rights – which are typically cleared directly with rightsholders. As a result, platforms such as Steam do not normally require licences from performing rights organisations such as ASCAP or BMI in relation to downloads. It is worth noting that the Music Modernization Act 2018 established a Mechanical Licensing Collective (MLC) to administer mechanical royalties for digital audio streaming services in the US. However, this framework applies to audio-only services and does not extend to audiovisual content or games.
The audiovisual streaming environment is slightly different. Streaming usually engages both reproduction and public performance rights. In practice, however, those rights are often addressed through licensing arrangements with the publisher because organisations such as ASCAP and BMI represent their members on a non-exclusive basis, thus leaving publishers with the ability to negotiate and grant rights directly.
The European framework, by contrast, looks markedly different.
When composers and songwriters join PRS for Music, they assign their public performance and communication to the public rights – including broadcast and making available – exclusively to the society.
As a result, synchronisation licences or commissioning agreements alone rarely provide complete clearance. Additional licences may be required depending on (inter alia) the media and territory of exploitation, particularly in jurisdictions where those rights are exclusively licensed or assigned to collective management organisations.
The US is, in many respects, the exception to this rule – something that the games industry has not always fully absorbed. Unlike the non-exclusive arrangements common in the US, those performing and making available rights outside of the US often cannot be licensed (or assigned) directly from rightsholders. Publishers do, however, retain control over the mechanical (reproduction) right unless they choose to administer it via MCPS. In the digital context, this technically means that both the PRS-administered right and the MCPS-administered right may be engaged – meaning that a complete picture of clearance requires attention to both.
At the centre of this framework sits the making available right, derived from European copyright directives and implemented across the EU and UK law. The right covers situations in which music (directly or via a film, video game, etc.) is made accessible to consumers on demand – precisely the model on which most digital services operate. In practice, this means that when a game is offered for download or streamed online, the musical works embedded in that game are considered to have been made available to the public. In territories where those rights are assigned to a collecting society, the platform itself may therefore require a licence.
The picture becomes even more complex outside the US and the UK, particularly with regards to the so-called BIEM societies, which take an assignment of performing rights and the mechanical rights on behalf of their members – societies such as SACEM in France and GEMA in Germany which operate under their own rules governing the exploitation of these rights.
Becky Brook, a licensing expert at the intersection of music and technology, stated that “it’s often a rude awakening that a worldwide sync and/or mechanical licence isn’t necessarily sufficient for online exploitation outside the US. I’m sure BIEM societies will be watching the progress of this suit extra closely, not least given their more expansive assignment of rights.“
This is likely the crux of the dispute with Valve Corporation/Steam – according to PRS for Music, games distributed via Steam contain works written by its members but have never been licensed for the making available of those compositions to consumers in the UK.
The Overlooked Issue of Platform Liability
A digital service accessible in the UK or any other country of the European Union is generally treated as making works available to the public within those territories. As a result, the relevant local collecting societies – each of which exclusively controls the making available right in respect of its territory – may assert that the platform needs a licence in its territory (as PRS has now done for the UK), even if the platform itself is incorporated in another jurisdiction, such as the US.
In most cases, audiovisual streaming platforms address this through so-called blanket licences obtained from performing rights organisations in each territory where the service operates. Those licences typically cover all repertoire controlled by the society for exploitation on such platform.
One example frequently cited in the games industry is Epidemic Sound, whose model was specifically designed to challenge these existing licensing structures. Epidemic Sound’s model is, however, the exception rather than the rule. For the vast majority of music used in games a common misconception persists: a licence may appear to be “worldwide” and “across all media” yet still require additional collective licences in the territories where actual communication to the public or reproduction takes place via the platform on which the game is hosted and/or offered to consumers.
In other words, a platform like Steam might still need to obtain a licence from the relevant national collecting society in the territory in which it operates.
A Warning Shot for the Games Industry
The case between PRS for Music and Valve Corporation is unlikely to be the last of its kind.
As developers’ games get commissioned for international distribution, clearing music rights is no longer simply an issue at development stage. It is a potential platform licensing issue which could be pushed down the chain to developers to be addressed.
According to Sergio Pimentel, a highly experienced music supervisor in the games sector and founder of Synchronicity Music, there is a further concern that games companies might, because of these complexities, stop using commercial music or outsourcing to composers who are signed to collecting societies “unless this is all sorted out in a manner that works for everyone”.
Looking ahead, the games industry cannot afford to treat music rights as a one-off concern. Companies that continue to rely solely on US-centred licensing approach risk regulatory and financial exposure in Europe and beyond. Publishers, developers, and platform operators alike must recognise that global music licensing is no longer optional – it is a core element of games platform strategy.
